Procurement Law Primer v2-1

Procurement Lore or Procurement Law ?
A GUAM PROCUREMENT PROCESS PRIMER

( Ver 2.1)
(Both more and less than you will ever want to know)
John Thos. Brown

Attorney at Law

(Ver 2.1)
The author, John Thos. Brown, is an attorney, licensed on Guam, serving as General Counsel for Jones & Guerrero Co., Inc., its affiliates and subsidiaries. The opinions expressed are his own and do not constitute legal advice. This paper began as a short outline, prepared for delivery of an introductory procurement seminar to the Guam Chamber of Commerce Small Business Committee in March 2009. It then took on a half-life of its own. In the developing half-life of this paper, to add current broader context to the procurement issues facing Guam, beyond the historical context mentioned in the Introduction, the author has begun a blog, Blogged Down in Procurement, online at http://bloggeddowninprocurement.blogspot.com/. In addition to helpful links (including a link to the latest published version of this paper), the blog contains a random collection of articles discussing procurement issues appearing from around the world, with occasional comment. The author is forever grateful to Mr. Kenneth T. Jones, Jr., founder of Jones & Guerrero Co., Inc., for his encouragement and support of the authors endeavors to bring regularity and rationality and, above all, the rule of law to a process which has too often been seen, by an outsider, as capricious if not influenced by extraneous matters. This Primer is intended to be for non-commercial educational purposes. The carabao and cart graphic used in the paper was taken from an online educational source; no copyright claim is made to the graphic. This is Ver 2.1, June 2011. The author expects it to be tinkered with and revised periodically as substantive or editorial changes are made, new cases and issues arise, or as otherwise deemed the thing to do. You may contact him to obtain the latest version at jngoz@ozemail.com.au. Alternatively, the author intends to upload revisions to www.Scribd.com, where you can search procurement law primer for the various posted versions. The online version, in pdf format, can be more useful than a printed one because the blue-highlighted links are active when read in the freely available Adobe Reader (http://get.adobe.com/reader/), and the Adobe Reader has a search feature allowing you to search the Primer for, example, key words or section or case numbers. Guam Procurement Process Primer Ver 2.1
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TABLE of CONTENTS 3 INTRODUCTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 I. SOURCES of Guam Procurement Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 A. B. C. D. E. F. II. The Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 The Regulations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Decisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Other jurisdictions, experts, authors, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Lore.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 The law of contract: private vs public. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
PURPOSES AND POLICIES of Guam Procurement Law.. . . . . . . . . . . . . . . . . . . . . . . . . . 9 A. D. E. F. G. H. I. This Chapter shall be construed and applied to promote its underlying purposes and policies... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 To provide for increased public confidence.. . . . . . . . . . . . . . . . . . . . . . 10 To ensure the fair and equitable treatment. . . . . . . . . . . . . . . . . . . . . . . 10 To act in good faith. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 To provide increased economy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 To foster effective broad-based competition. . . . . . . . . . . . . . . . . . . . . . 12 10. 5. Fair and open competition is a basic tenet. . . . . . . . . . . . . . . . . 13 Ethical Standards. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 a. b. c. For Government Employees. . . . . . . . . . . . . . . . . . . . . . . 15 For Non-Government Employees. . . . . . . . . . . . . . . . . . . 15 Examples of specific standards. . . . . . . . . . . . . . . . . . . . . 16 (1) (2) Gratuities, kickbacks and favors . . . . . . . . . . . . . 16 Conflicts of interest:.. . . . . . . . . . . . . . . . . . . . . . 17 To provide safeguards. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
This Table of Contents is provided with the intent that it will facilitate both a quick overview of Guam Procurement Process Law as well as an issue-spotting tool and easy point of entry for questions concerning particular issues. Only the most determined reader will want to wade through the whole Primer. For many, this Table of Contents is all they will ever need or want to know. However, even the author usually turns first to this Table of Contents to guide him to particular issues. Guam Procurement Process Primer Ver 2.1
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J. K.
To require public access.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Policy in favor of planned procurement. . . . . . . . . . . . . . . . . . . . . . . . . . 20 2. Delivery time is not as critical as low price. . . . . . . . . . . . . . . . . . 20 e. Competition is the most fundamental goal of acquisition planning. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
L.
Policy in favor of local procurement. . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 5. Local preference may not be applicable to construction contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
N. O. P.
The Procurement Act applies to almost all GovGuam purchases. . . . . . . 25 7. Necessity of certification of availability of funds. . . . . . . . . . . . 28 Making and keeping determinations. . . . . . . . . . . . . . . . . . . . . . . . . . . 32 A word or two from your author. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 3. The Guam legislature chose to forego procurement training and education when it adopted the Guam version of the Model Procurement Code. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 4. A proposal for a Guam Procurement Institute and Advisory Council . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
III.
PROCUREMENT ADMINISTRATIVE STRUCTURE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 A. B. Centralized Procurement Policy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 Policy Office. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 4. The Policy Office is meant to be independent of the Governors executive control. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 (1) 5 GCA 5102 and 5130(a) and (b), mandate that only the Policy Office may promulgate procurement regulations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 C. D. E. F. G. GSA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 DPW.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 Public Auditor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 Attorney General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 The role and authority of agencies in procurement activities (if any). . . . 51 3. PL 16-124 stripped all GovGuam agencies of procurement authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 (2) 5. The Procurement Act has not restored any authority taken away by PL 16-124. . . . . . . . . . . . . . . . . . . 53 Agencies only have such procurement authority as may be
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Guam Procurement Process Primer Ver 2.1
specifically granted by legislation or delegation... . . . . . . . . . . . . 55 8. The CPO or the Director of Public Works has only a limited power to delegate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 c. 5131 mandates the agencies to adopt the Policy Office regulations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 IV. METHODS OF SOURCE SELECTION.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 4. F. Unless other wise [sic] authorized by law. . . . . . . . . . . . . . . . . 67 Changes (including extensions, renewals, amendments, task orders) to contracts, awards and solicitation: when new solicitation required. . . . . 68 7. 8. V. VI. Price changes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 Changes in quantity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
BID BONDING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79 COMPETITIVE SEALED BIDDING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82 B. C. D. E. F. G. H. The form is always by Invitation for Bids (IFB).. . . . . . . . . . . . . . . . . . . . . 82 Distribution, notice and bidding time. . . . . . . . . . . . . . . . . . . . . . . . . . 83 Withdrawal, cancellation and rejection of all bids. . . . . . . . . . . . . . . . . . 84 Bid opening. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87 Bid mistakes.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87 Failure to seek clarification can be a trap.. . . . . . . . . . . . . . . . . . . . . . . . . 88 The award of the contract is to the lowest responsible bidder whose bid meets the requirements and criteria set forth in the IFB.. . . . . . . . . . . . 88 (4) (5) 2. 3. I. All bids should be rejected if the prices are unreasonable. . . . . . . . . . . . . . . . . . . . . . . . . . . . 90 Abnormally low bids and proposals .. . . . . . . . . . 90 Award to next lowest bidder. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90 What if there is only one responsive bid or proposal?.. . . . . . . . . 91 b. J. K. Acceptability evaluation... . . . . . . . . . . . . . . . . . . . . . . . . 94 (1) a. 4. Descriptive literature.. . . . . . . . . . . . . . . . . . . . . . 94
What is a Responsive Bid?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
Materiality only concerns Responsiveness. . . . . . . . . . . . . . . . . . . . . 97 Matters of bidder prejudice. . . . . . . . . . . . . . . . . . . . . . . 97 What is a Responsible bidder?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 Standards of Responsibility. . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
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8.
Unrealistic prices or costs, and abnormally low bids and proposals, may be an element of non-responsibility, and may bear on technical acceptability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
9. 10. L. M. N. VII.
Inquiry into determination of responsibility. . . . . . . . . . . . . . . . 106 The interesting requirement for a writing .. . . . . . . . . . . . . . . . . 107
Qualified Bidder lists.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109 What information is available from an IFB?.. . . . . . . . . . . . . . . . . . . . . . 109 A Note on All or None bids: Why not take part of me?. . . . . . . . . . . . 110
MULTI-STEP SEALED BIDDING.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111 D. E. The first phase. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113 Phase two. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116
VIII.
REQUESTS FOR PROPOSALS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117 normally only allowed for professional services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117 1. 2. 6. 7. What is meant by professional?. . . . . . . . . . . . . . . . . . . . . . . . 117 What is meant by services?. . . . . . . . . . . . . . . . . . . . . . . . . . . 119 The processing of properly solicited offers in an RFP to award. . 121 The Evaluation of RFP offers: .. . . . . . . . . . . . . . . . . . . . . . . . . . 124 c. RFP Evaluation Factors:. . . . . . . . . . . . . . . . . . . . . . . . . . 124 (3) (4) 8. 9. 10. 11. 14. E. Price is not a proper evaluation factor. . . . . . . 125 Relativity of factors to be evaluated.. . . . . . . . . . 128
RANKING:. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128 Determination of Price:. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129 Determination of Fair and Reasonable:. . . . . . . . . . . . . . . . . . . . 129 l. Cost realism analysis. . . . . . . . . . . . . . . . . . . . . . . . . . . 132 Conduct in negotiations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135 What information available from an RFP?. . . . . . . . . . . . . . . . . . 138
Architectural, engineering and land surveying vs. construction services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139
IX.
UNSOLICITED OFFERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142 shall be subjected to the Competitive Sealed Bidding . . . . . . . . . . . . . . . . . . . . . . . . . . 142
X.
SOLE SOURCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143
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XI.
SMALL PURCHASE PROCEDURES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146 H. I. Request for Quotation (RFQ).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146 Blanket Purchase Agreements (BPAs). . . . . . . . . . . . . . . . . . . . . . . . . . . 147
XII.
EMERGENCY PROCUREMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147 A. B. C. F. Requires an existing threat to public health, welfare, or safety under emergency conditions.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148 Emergency does not include management failure... . . . . . . . . . . . . . . 148 Emergency procurements shall be made with such competition as is practicable under the circumstances... . . . . . . . . . . . . . . . . . . . . . . . . . 148 LIMITED TO 30 DAY SUPPLY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148 1. It is not an emergency if another source selection method is available. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148
XIII.
FEDERAL SUPPLY SCHEDULE PURCHASES must adhere to specified methods of source selection available under the Guam procurement law. . . . . . . . . . . . . . . . . . . . . . . . . . 149 2. Federal regulations require GovGuam to purchase from Supply Schedules according to Guam law.. . . . . . . . . . . . . . . . . . . . . . . 150
XIV.
SPECIFICATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 152 A. B. C. E. F. G. H. K. L. M. Specifications Are the Bedrock of Procurement. . . . . . . . . . . . . . . . . . . 152 Competition is the Bedrock of Specifications. . . . . . . . . . . . . . . . . . . . . 153 AMENDING specifications... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 154 MINIMUM needs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 154 Unduly RESTRICTIVE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155 It is the general policy of this territory to procure standard commercial products. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155 Non-proprietary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155 BRAND NAMES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 156 Brand Name OR EQUAL.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 156 The Who and How of specification preparation and use.. . . . . . . . . . . 157 7. Procedures for Development of Specifications. . . . . . . . . . . . . . 159
XV.
VARIOUS CONTRACT TYPES, AND THEIR REQUIREMENTS FOR USE.. . . . . . . . . . . 160 B. The government agencies have only restricted power as to the form and substance of certain material general contract terms.. . . . . . . . . . . . . . . 160
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Policy Regarding Selection of Contract Types. . . . . . . . . . . . . . . . . . . . . 161 Multi-term contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 162 (1) Leases are not multi-term contracts. . . . . . . . . . . 163 Fixed-Price .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163 Indefinite Quantity.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 164 Requirements contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165 Leases, of both equipment and other supplies or real property,. . . . . . . 168 Options to purchase, renew, extend. . . . . . . . . . . . . . . . . . . . . . . . . . . . 168 Multiple Source Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 168 1. 2. An Incremental Award is a variety of Definite Quantity. . . . . . . 169 A Multiple Award is a variety of Indefinite Quantity. . . . . . . . . 169
XVI.
PROCUREMENT PROTESTS.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 169 D. ONLY AGGRIEVED BIDDERS CAN PROTEST. . . . . . . . . . . . . . . . . . 170 2. Who is an aggrieved person. . . . . . . . . . . . . . . . . . . . . . . . . . . . 171 d. e. E. G. Who is a prospective bidder, offeror or contractor?. . . . 175 Standing by being aggrieved:. . . . . . . . . . . . . . . . . . . . 177
Who do you protest to?.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 178 TIMING FOR PROTEST FILING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 179 1. 4. 6. 7. General Rule: 14 days from knowledge of aggrievement... . . . . 179 POSSIBLE EXCEPTION for Pre-bid-opening issues:. . . . . . . . . . . 180 Be aware of the Federal constructive notice rule for IFBs.. . . . 183 Note possibility of 30 day filing period for initiating a protest action in the Superior Court.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 194
I.
Request for Reasons for Rejection of Bid. . . . . . . . . . . . . . . . . . . . . . . . 196 7. A Request for Reasons would not usually constitute a Bid Protest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 198
J. K. L.
Format of Protest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 198 1. 2. 2. First, distinguish between a complaint and a protest.. . . . . . . . . 198 Parties to the Protest:.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 205 This is a potential trap for the unwary. . . . . . . . . . . . . . . . . . . . . 208 RESOLUTION OF THE BID PROTEST. . . . . . . . . . . . . . . . . . . . . . . . . . 204 Requests for Reconsideration of Protest Decision. . . . . . . . . . . . . . . . . 207
XVII.
THE AUTOMATIC STAY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 209 a. Beware this gap.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 209

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D. E.
Lifting the Automatic Stay; confirming a Declaration of Substantial Interest: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 211 Consider an ordinary stay. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 221
XVIII. APPEALS OF BID PROTESTS TO THE PUBLIC AUDITOR.. . . . . . . . . . . . . . . . . . . . . . 224 B. D. Prerequisites of Appeal are Protest and Decision. . . . . . . . . . . . . . . . . . 225 15 Day Filing Deadline. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 226 2. 3. E. The question of timeliness vs jurisdiction... . . . . . . . . . . . . . . . . 226 Equitable Tolling.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 228 h. 3. 4. 6. Regulatory limitations periods are not jurisdictional;. . . 237
Jurisdiction of the Public Auditor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 239 Scope of OPA jurisdiction: . . . . . . . . . . . . . . . . . . . . . . . . . . . . 240 OPAs Standard of Review is broader than Court review:. . . . . 241 OPA does not have jurisdiction of matters merely incidental to procurement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 243 b. c. OPA jurisdiction does NOT include direct review of Ethical violations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 244 Wage Determination issues.. . . . . . . . . . . . . . . . . . . . . . 244 (a) It may be possible to contest an award (but arguably not a bid) made to a service provider under an IFB . . . . . . . . . . . . . . 245 d. Certification of Funding.. . . . . . . . . . . . . . . . . . . . . . . . . 247 CAVEAT: This outline is bare bones.. . . . . . . . . . . . . . . 251
F.
OUTLINE OF AN APPEAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 250 c. 2. 3. 4. 5. First step, filing the Notice of Appeal. . . . . . . . . . . . . . . . . . . . . 251 Second Step, the Procurement Record. . . . . . . . . . . . . . . . . . . . 252 a. Within five (5) days from filing the Notice of Appeal. . . 252 Objections to OPA jurisdiction. . . . . . . . . . . . . . . . . . . . . . . . . . 253 Third Step, the Agency Report. . . . . . . . . . . . . . . . . . . . . . . . . . 257 b. 6. The Agency Report is meant to be filed ten (10) days after receiving the Notice of Appeal. . . . . . . . . . . . . . . . . . . . 257 Fourth Step, the Appellants Comments on Agency Report and Request for Hearing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 257 c. 7. Comments on the Agency Report must be filed within ten (10) days of the filing of the Agency Report. . . . . . . . . . 258 Fifth Step, the agencys Rebuttal to Appellants Comments on
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Agency Report... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 258 b. 9. 10. 11. 12. 13. G. 1. 3. 4. 5. 6. 8. 9. XIX. Rebuttals are meant to be filed within five (5) days of filing the Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 258 Discovery. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 258 Role of the Hearing Officer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 259 The Hearing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 260 The Decision.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 262 Finality of OPA decisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 263 Filing of Notice of Appeal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 264 Agency must file Procurement Record. . . . . . . . . . . . . . . . . . . . 264 Agency must file Agency Report. . . . . . . . . . . . . . . . . . . . . . . . . 264 Appellants or any Interested Partys Comments. . . . . . . . . . . . . 264 Either party must make written request for Hearing or it may be waived. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 265 Notice of Hearing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 265 Decision. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 265
Chronological flow of a simple appeal. . . . . . . . . . . . . . . . . . . . . . . . . . 264
APPEAL REMEDIES (such as they are).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 265 B. C. Money.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 265 Other remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 268 1. 2. Prior to award.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 268 Remedies after award.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 269 d. e. 3. 4. If the person did act fraudulently. . . . . . . . . . . . . . . . . . 269 If the person awarded the contract did not act fraudulently . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 273 Query if person awarding contract acts in bath faith.. . . . . . . . . 276 It is obvious, then, based on the discussion above of pre- vs. postaward remedies, that the timing of the award is critical. . . . . . 277 a. 5. D. So, what then is an award? . . . . . . . . . . . . . . . . . . . . 277 Note: post-award prejudice and a proposal to rectify it. . . . . . . . 286
Alternate injunctive action. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 287
XX.
Some issues relating to contract performance.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 288 B. C. Performance Bonding.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 288 Contract disputes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 289
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1. 2. 3. D. XXI.
Who hears contract disputes? .. . . . . . . . . . . . . . . . . . . . . . . . . . 289 Procurement Act or Claims Act?. . . . . . . . . . . . . . . . . . . . . . . . . 290 Contract dispute procedure.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 291
Appeals (to OPA) from Contract Disputes... . . . . . . . . . . . . . . . . . . . . . 292
Getting paid. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 296 A. Prompt Payment Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 296 1. 2. B. C. D. Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 296 Discounted settlements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 296
Non Prompt Payment Act Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 297 Promissory notes.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 297 Government Claims Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 297
XXII.
Public enforcement of certain procurement matters.. . . . . . . . . . . . . . . . . . . . . . . . . . 298 B. C. D. Guam taxpayers have standing to bring suit against improper spending. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 298 The public can petition to suspend or disbar a contractor.. . . . . . . . . . . 299 Public right to obtain procurement data. . . . . . . . . . . . . . . . . . . . . . . . . 300
XXIII. The Courts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 301 B. C. D. The case for a less deferential standard of Court review of certain procurement determinations under Guam law... . . . . . . . . . . . . . . . . . . 301 Court review of bid protests:. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 308 Court review of OPA bid dispute decisions.. . . . . . . . . . . . . . . . . . . . . 310 3. 4. 5. F. Confusion has existed as to the form of action of the judicial review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 310 Standing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 314 Failure to appear and exhaustion of remedies. . . . . . . . . . . . . . 318 c. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 321
Court review of OPA contract dispute decisions . . . . . . . . . . . . . . . . . 319
XXIV. A review (with commentary and full disclaimer) of some of the OPA Decisions. . . . . 323 1. 2. 3. 4. OPA-PA-06-001, In the Appeal of the Debarment of Rex. . . . . . 323 OPA-PA-06-002, In the Appeal of Far East Equipment. . . . . . . . 323 OPA-PA-06-003, In the Appeal of RadioCom. . . . . . . . . . . . . . . 323 OPA-PA-07-002, In the Appeal of Emission Technologies. . . . . 324
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5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18.
OPA-PA-07-006, In the Appeal of Great West Retirement Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 325 OPA-PA-07-007, In the Appeal of Dick Pacific. . . . . . . . . . . . . . 326 OPA-PA-07-008, In the Appeal of Advance Management, Inc... 327 OPA-PA-07-009, In the Appeal of Pacific Security Alarm. . . . . . 328 OPA-PA-07-010, In the Appeal of Far East Equipment . . . . . . . . 329 OPA-PA-07-011, In the Appeal of JMI Medical . . . . . . . . . . . . . 330 OPA-PA-08-008, In the Appeal of Latte Treatment Center. . . . . 331 OPA-PA-08-009, In the Appeal of Captain, Hutapea. . . . . . . . . 335 OPA-PA-09-002, In the Appeal of Teal Pacific, LLC. . . . . . . . . . 336 OPA-PA-09-005, In the Appeal of Guam Community Improvement Foundation, Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 336 OPA-PA-09-010, In the Appeal of ASC Trust Corporation. . . . . 338 OPA-PA-10-002, In the Appeal of Teleguam Holdings, LLC dba GTA Telecom. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 339 OPA-PA-09-012, In the Appeal of Z4 Corporation. . . . . . . . . . . 340 OPA-PA-10-005, In the Appeal of Pacific Data Systems, Inc.. . . 342
INDEX OF PERTINENT DECISIONS and AUTHORITIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 353
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INTRODUCTION: According to the Spanish historian Carlos Madrid, in his book Beyond Distances (Saipan, Northern Mariana Islands Council for Humanities, 2006), there was an uncommon distress in the Marianas Islands in 1876, brought about by a combination of factors, chiefly Spains forcible introduction into the Islands of hundreds of political and other criminal deportees from Spain, but also typhoon and drought. The situation on Saipan had become particularly dire. As he tells the story (pp. 173175),
Chamorros and Carolinians together with the deportees were facing a famine without precedent that could bring the island to catastrophe. Martn [the Saipan Spanish authority] wrote Governor Brabo [the Guam-based Governor of the Marianas] with an urgent request for provisions, since in a few days they would literally have nothing to eat. In Guam this request would have been received with great concern as resources in Agaa were also extremely limited. But the situation in Saipan was nevertheless so pressing that Governor Brabo authorized, on his account, the purchase of all the necessary rice, which was to be sent in the launch San Jos as soon as possible. The obligatory legal procedures, which mandated that government requisitions had to be contracted through free and open auction, still had to be fulfilled. The gobernadorcillo of Agaa, following the custom, ordered the prominent display of the notice announcing the public auction in the busiest areas of the capital. At the same time the pregonero, or town crier, spread the news in the streets for three consecutive days. In order to save time, knowing that in the whole of the Marianas only George Johnston could provide the necessary quantities of meat from his leasehold in Tinian, the request for the purchases of barrels of cured pork was directly made to his representative Vicente Calvo. The barrels were to be sent to Saipan in the amount of a pound daily per deportee. The conditions of the auction of palay or unthreshed rice were basically to be able to provide dry rice, free of dust and preferably from the last harvest. The minium quantity for each bid being ten cavanes, it had to be delivered to the Tribunal in Agaa within forty-eight hours. In return, it was guaranteed that the payment would take place on the day after delivery, which was an incentive to all who knew that the colonial administration was a late and often bad customer. The auction was held in the government offices on the ground floor of the
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Palace, at ten oclock in the morning of Monday, July 26, 1876. To speed up the process, bids were submitted not in writing but vocally. All the bidders must have agreed on a price among themselves before the auction, as everyone offered the same bid of two pesos per cavan. The names of the contractors and the amounts they agreed to supply were: Don Gregorio Prez Don Juan Blas Don Andrs de Castro Marcelino Sy Pingco Demetrio Quitugua 210 Cavanes 60 cavanes 70 cavanes 10 cavanes 50 cavanes
The mention of these individuals is very significant since they undoubtedly represented a social class of means, as they had capacity enough to produce on their lands or accumulate sufficient rice to be able to provide in only two days quite large amounts. To be able to provide such quantities implied possession of tracts of land much larger [than] the needs of a regular family required. Alternatively, the bidders had resources enough to buy palay from other people. Gregorio Prez contracted for more than half of the auction quantity, although the documents related to this episode do not reflect if he was the largest producer or whether he received a favorable treatment on the part of the colonial authorities. What was the social background of these people? How the principala of the villages and the capital had the right to use the title Don was earlier discussed, but in actual fact many individuals not belong[ing] to the principala were also referred to as Don or Doa probably because [of] their social or economic ascendancy. In this case, the fact that three of the five successful bidders were termed Don does not establish that Marcelino Sy-Pingco, a Christian Chinese, and Demetrio Quitugua, a Chamorro like the rest, were members of the principala, but that among the major producers of rice in Guam were Chamorros of different social backgrounds, as well as some non-Chamorros such as Sy-Pingco.
~~~~~~~~~~~~~~~~~ Emergency, competitive and sole source procurement, specifications, delivery terms, public notice, collusion, responsive and responsible bidders, law (obligatory legal procedures) and lore (according to custom) .... All have long been a familiar part of Guam procurement history.
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I.
SOURCES of Guam Procurement Law A. The Law (Guam Procurement Act: 5 GCA Div. 1, Chpt 5, 5001 et seq. http://www.justice.gov.gu/CompilerofLaws/GCA/05gca/5gc005.PDF) . Codes are cited as [Title number] G.C.A. [Section number], e.g., 5 GCA 5210. 1. It may be interesting to note that Guams initial procurement law was enacted in PL 2-1, 1958, codified at Government Code 6600 et seq. It was not much of a law, abdicating responsibility to the Executive Governor to declare such terms, conditions, and procedures as shall be prescribed by the Governor by Executive Order.... (GC 6600.1.) a. The Procurement Act characterised the early procurement regime in the Official Comment to 5 GCA 5001: procurement law under Executive Order 65-12A on Guam is vague and leaves much to administrative direction.
2.
The law was originally enacted in 1982 in PL 16-124, becoming effective in October 1983, and had a major overhaul in 1985 in PL 18-44, adding more of the ABA Model Procurement Code (MPC) provisions left out of PL 16124. There has been periodic other tinkering since. Guams Procurement Act is based on the American Bar Association Model Procurement Code, 1979. a. This Chapter is essentially the Model Procurement Code approved by the American Bar Association in 1979. A model code is one which provides a guide for the jurisdictions which wish to adopt it, but does not require that it be followed precisely. It is different from a uniform code, the latter being intended to unify the laws of the jurisdictions which adopt it. The ABA and the drafters of the Model Procurement Code recognize the wide organizational differences between the states and jurisdictions under the U.S. Therefore, there are many portions of this Model Code which are optional, or which may be modified. This Act has modified the model code to suit Guams organizational structure and function. Because this Act intends that the Policy Office adopt implementing regulations, Model Regulations are also available, and must be
3.
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examined and changed to coincide with the version of this Act actually adopted by the Legislature. The Official Comments to the Model Procurement Code are a part of the Legislative History of this Chapter and, also, may be obtained from the American Bar Association. (Official Comment to the Guam Procurement Act.) This Official Comment, referred to herein as the introductory Official Comment, as adopted as Section 1 of PL 16-124 and appears in the Compilers current codification of the Procurement Act at the end of the outline of the Procurement Act, Title 5, Division 1, Chapter 5, Article 1, Part C, but confusingly seems to be comment to 5030 in the Guam Compilers version: http://www.justice.gov.gu/CompilerofLaws/GCA/05gca/5gc005.PDF, at page 2 of the pdf. 5030 actually appears on page 11 et seq. of the Compilers code. B. The Regulations Guam Administrative Regulations (2 GAR Div 4, 1101 et seq.). http://www.justice.gov.gu/CompilerofLaws/GAR/02gar.html (Scroll down to Division 4, Procurement Regulations, and open each Chapter). Regulations are cited as [Title] G.A.R. [Section number], e.g., 2 GAR 3116. 1. 2. Based on ABA Model Procurement Regulations. Note some individual agencies have their own regulations, as discussed below.
C.
Decisions 1. Courts http://www.guamsupremecourt.com/ a. A decision cited in the form [year] Guam [number] is a Guam Supreme Court decision, e.g., 2004 Guam 15. It overrides all other local decisions. Guam Superior Court (trial court) cases are not easily available or researchable. The Law Library contains binders with hard copies of most Superior Court, and the binders contain a spread sheet of the cases in each binder, which may or may not indicate the issues addressed in the cases. Superior Court cases are referred to as such in the case citations.
b.
2.
Public Auditor http://www.guamopa.org/ a. A decision cited in the form OPA-PA-xx-xxx is a Decision of the Guam Public Auditor, where xx is the last 2 digits of the calendar year the action is filed, and xxx is the chronological order of actions filed in that year.
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b.
Click on Procurement Appeals at the OPA website to review all appeals ever brought to the Public Auditor, and clicking on Documents Filed within an appeal reveals a wealth of interesting argument and examples to form your own appeal. Also note other resources on the OPA website, such as Audit Reports, e.g., General Services Agency, Competitive Sealed Bidding, Sole Source, and Emergency Procurement Functions, Performance Audit, OPA Report No. 04-14, December 2004, http://www.guamopa.org/docs/OPA0414.pdf
c.
D.
Other jurisdictions, experts, authors, etc. 1. Opinions and Legal Memoranda of the Guam Attorney General, who is a representative of the Executive Branch and is expected to state the Executives legal view, even when contrary to the Executive officers and agencies. While not binding on Courts (or the OPA, as discussed below), Opinions and Legal Memoranda of the AG do have some presumptive value, and, more importantly, provide guidance to the Executives definition, and clarity of the intent behind, the governments written regulations, practices and policies, as well as its perception of legislative enactments. a. Guam Attorney General Opinions are at http://www.guamattorneygeneral.com/AG_Opinions.html and Legal Memoranda at http://www.guamattorneygeneral.com/AG_Legal.html
2.
Other Model Code States, e.g., Maryland, Hawaii http://www.aia.org/SiteObjects/files/abamodelcode.pdf a. Maryland State Board of Contract Appeals4. http://www.msbca.state.md.us/
3.
Note the differences between the details, and the similarities of general legal principles, for guidance from other jurisdictions, with particular attention to the Federal Acquisition Regulations (FARs), http://www.arnet.gov/far/90-36/pdf/toc.html
Maryland was an early adopter of the ABA Model Procurement Code and has established a long line of reasoned, consistent and published decisional authority specifically applicable to MPC issues (under its version, which runs fairly closely to the MPC), although also drawing on analogous law from Federal and other jurisdictions. As such, the author asserts its decisions are both pertinent and instructive to interpreting Guams Procurement Law. There are numerous citations to the Maryland State Board of Contract Appeals decisions in this Primer, referenced as MSBCA No. xxxx.
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a.
The author makes numerous references to the FAR in this paper, for purposes of illustration, general principle and guidance. This is not intended to imply any recommendation that Guam adopt the FAR as its acquisition model. The FAR is a very complicated and complex system, intended to be integrated with many other federal acquisition schemes, scaled far beyond the needs of Guam (it must accommodate acquisition of highly advanced, developmental and secret projects, for instance), and specifically contemplates and requires a league of highly trained, compensated and professional procurement specialists. Perhaps some day Guam may be in a position to follow suit. Until it can handle the bare requirements of the ABA Model Code, however, it is the authors belief that any attempt to make a comprehensive adoption of the FAR in lieu of the Model Code would be foolhardy. Which is not to say that particular provisions or ideas might not be carefully adapted for inclusion in Guams version of the MPC.
4.
There isnt a huge resource of expert procurement literature. The George Washington University Law School in Washington, D.C., conducts a Government Contracts Program, and its resident instructors and authors, in particular Ralph C. Nash, Jr., and John Cibinic, Jr., have authored a couple of the authoritative and widely cited texts, but the primary focus of their programs and works are Federal Procurement Acquisition, not the MPC; nevertheless, many of the principles are the same or instructive.
E.
Lore: As Carlos Madrid described the incident in the Introduction to this Primer, the procurement of supplies to meet the dire needs of the Marianas Islands in 1876 had obligatory legal formalities to follow, but proceeded according to custom. Unfortunately, much of what passes for regular procurement practice is the custom, habit and lore handed down from lawyer to lawyer, contractor to contractor, procurement officer to procurement officer. Even those well placed and motivated to know better often act on instinct, common sense or analogy to make decisions about how procurement should be conducted, regardless of what the law actually requires. The best and worst of explanation often offered in defense of questioned procurement practice is, but thats how we do it. It is the best explanation because, at least someone is paying some attention and to some extent there is some consistency, if nothing else. It is the worst because, when everyone falls off the same page, is blind to what the law requires, and starts making things up as they go or have gone, procurement becomes arbitrary, inconsistent and obtuse, if not slipshod and detrimental to government and private contractors alike. The Guam Procurement Act has, with some exception, pretty much been intact now for well over twenty years. Still, the law is only recently really being discovered and, sadly, some very fundamental aspects are only now being acknowledged. For instance, for years GovGuam GSA has purchased directly from the Federal Supply
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Schedules in disregard of any local procurement laws or regulation, but with full support of a series of legal opinions from the Attorneys General past and present. This has seen an expenditure of hugely significant sums of public funds without the usual accountability and competition required by law. Another example: everyone knows the lowest responsive and responsible bidder is meant to win a bid award, yet we have only recently had a Decision of the Public Auditor, acknowledged as a case of first impression, that pointed out responsive is not responsible and determinations of responsibility cannot be transformed into issues of non-responsiveness merely by the mandate of an Invitation for Bids. Guam procurement lore had long taught us, and wrongly, just the opposite. The author makes no claim to great authority of the subject. He acknowledges willingly that procurement law has been seen to be impenetrably obtuse, stultifyingly boring, and an aggravation to government and private business alike. He was also himself well versed in and convinced by procurement lore; until, that is, he was forced to spend some time and have a look under the hood. He was surprised, after more than a little work at it, to find an almost elegant internal structure, cohesion and meaning in the Guam Procurement Law that previously was unknown to him. It was a bit of a Eureka moment. The purpose of this paper is to, hopefully, share with you that Eureka moment. It is only an outline and will not cover every topic of Guam procurement law and regulation. Its focus is on law and not the harder practical issues of the day to day implementation of the law and the demands of using agencies. It will not unlock all the secrets of the Guam Procurement Law but will hopefully provide a handy reference to some of them. Law is a dynamic thing, and what we know today will not necessarily be true tomorrow. No one should rely on the statements in this paper as legal advice. The hope is that this paper will provide quick and easy points of entry to anyone trying to delve into the Guam procurement regime. The procurement process is intended to be expeditious and it can be difficult, when presented with a procurement issue, to gather and assess the law and arguments for ones own case rapidly. This has led, so the author perceives, to protests and appeals based on unsubstantiated, incomplete or unfocused argument; and where the arguments are not well put, the decision makers are too often left without the information they need to assist their critical analysis and informed judgment. Hopefully, this will be a go to resource in such instances. This effort is most importantly intended to help contribute to a unified knowledge, or debate, to regularize Guam procurement practice, and achieve the worthy procurement policy objectives, in the rational way the Guam Procurement Act contemplates. F. The law of contract: private vs public: It should be kept in mind that when we are speaking of government procurement, we are talking about a very specifically
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stylized version of contract law, and, in the context of competitive sealed bidding, we include the arcane subset of contract law dealing with auctions. Like contract law generally, this requires competent parties, offer, acceptance, certainty, consideration, remedies, etc. The general principles of contract law provide context and guidance to the overview of procurement law. See, for instance, the discussion below (Article XIX.C.4) answering the question, what is an award? Unlike the general private law of contract, however, public procurement law entails broader public policy considerations that constrain the application of general private law contract principles, to adapt it to the needs of a democratic, fair, prudent and accountable system of due process, public governance and use of public funds. It is, generally speaking, those constraints of fairness, prudence and accountability with which the law of public procurement most particularly deals. (See, Formation of Government Contracts, Third Edition, John Cibinic, Jr., and Ralph C. Nash, Jr., CCH/ Wolters Kluwer, at p1 and, again in more detail, in the chapter Contract Formation Principles at pp 203 et seq., cited hereafter as Cibinic and Nash.) For instance, private parties are free to compete, or not compete, to secure such contracts as they need or simply, for whatever reason, desire. They can amend their contracts til the carabaos come home, if they so desire. They can discriminate (generally speaking) with whom they deal, as to what they want to buy, how extravagant they want to be, and how to settle their differences. The stewards of the public purse, however, cannot purchase willy-nilly or spend public monies however they see fit; they must follow the rules of procurement to ensure fairness, prudence and accountability. This is not a yoke but the natural obligation of their stewardship. It must come with the office. 1. Contractors must never forget that, in conducting business with the government, they are dealing ... with a sovereign entity. For that reason, things that would be considered perfectly acceptable in private contracting might be criminal acts in federal [government] contracting. One prime example is gratuities. In private contracting it is routine, even expected and encouraged, to take customers out to lunch, or to send them gifts. In federal [government] contracting, at the very least, such actions would be considered impermissible gratuities if not out-right bribes. (Federal Government Construction Contracts, 2nd Ed., Branca, Silberman, Vento, Bastianelli III, Ness, and West, Editors, American Bar Association 2010, p. 1; cited herein as FedGov Construction Contracts.) Unless displaced by the particular provisions of this Chapter, the principles of law and equity, including the Uniform Commercial Code of Guam, the law merchant, and law relative to capacity to contract, agency, fraud, misrepresentation, duress, coercion, mistake, or bankruptcy shall supplement the provisions of this Chapter. (5 GCA 5002.)
2.
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II.
PURPOSES AND POLICIES of Guam Procurement Law A. This Chapter shall be construed and applied to promote its underlying purposes and policies. (5 GCA 5001(a).) Thus, the purposes and policies of the Guam Procurement Act are intended to be both effective and effected. Some of the Acts principal purposes and policies are set out in this Article. 1. The law and regulations specify certain purposes or policies of procurement law. These are not mere maxims, platitudes and ideals. They are intended to fill in the blanks and provide direction when the law or regulations have holes or are in need of clarification or direction. In procurement law, they have particular importance because the Public Auditor is charged with the broad duty to promote the purposes of the Procurement Act, not simply its black letter strictures. Some of the underlying purposes and polices are described in the subparagraphs following. a. In refusing to approve one government contract the Attorney General specifically concluded, There are established policies in government procurement law and practice that have been violated by the communication practices demonstrated in this procurement. Those policies are: to provide for increased public confidence in the procedures followed in public procurement; to ensure fair and equitable treatment of all persons who deal with the procurement system of this Territory; to foster effective broad-based competition within the free enterprise system; to provide safeguards for the maintenance of a procurement system of quality and integrity; and to require public access to all aspects of procurement consistent with the sealed bid procedure and the integrity of the procurement process. (See, Article III.F, below.)
2.
These broad policies outline the general rationale for the promulgation of this Code but are in no way to be interpreted as limiting either its provisions or application. (Commentary, Model Procurement Code 1-101.) In analyzing and construing the explicit purposes and policies, it is important to pay attention to all nouns, verbs, adverbs and adjectives.
3.
B.
To simplify, clarify, and modernize the law governing procurement by this Territory (5 GCA 5001(b)(1)). 1. While it is the intent of the MPC [Model Procurement Code] to simplify state procurement procedures, the effect on Guam will be to somewhat complicate them. This is because procurement law under Executive Order 65-12A on Guam is vague and leaves much to administrative direction. At least, this Act will regularize and centralize procurement on Guam and, in so doing, attempts to save money for the Territory and make procurement
Page 9
more certain and regular for the vendors. (Official Comment, 5 GCA 5001.) 2. A clear and comprehensive regulatory framework for the conduct of public procurement is a fundamental prerequisite for curbing corruption in public contracting. It is the basis for the development and application of equal practice, for transparency and fairness, and for meaningful review and control mechanisms. (Curbing Corruption in Public Procurement in Asia and the Pacific, Asian Development Bank, cited herein as Public Procurement in Asia/Pacific, Part 1, 1.)
C.
To permit the continued development of procurement policies and practices (5 GCA 5001(b)(2)). 1. Procurement rules need to be unambiguous and reliable over time to provide for steady and consistent practice and transparency, and to ensure that training programs in the subject are not made obsolete by constant changes in the procurement framework. Today, there is a growing consensus that the stability of the framework over time clearly benefits from the establishment of the constitutive elements of procurement rules in parliamentary law. Regulation at this level protects the framework against short-lived modifications through government decrees and confusion caused by overriding or conflicting parliamentary laws. (Public Procurement in Asia/Pacific, supra.)
D.
To provide for increased public confidence in the procedures followed in public procurement (5 GCA 5001(b)(3)). 1. It is essential that bidders, offerors, and contractors have confidence in the procedures for soliciting and awarding contracts. This can best be assured by allowing an aggrieved person to protest the solicitation, award, or related decision. (Commentary No. 1, Model Procurement Code 9-101.)
E.
To ensure the fair and equitable treatment of all persons who deal with the procurement system of this Territory (5 GCA 5001(b)(4)). 1. Transparency and fairness are essential preconditions for containing corruption in public procurement. Transparency renders abuse difficult and increases the likelihood of detection. Also, as bidders must trust in the fairness of the process to participate in a tender, the perception of transparency is crucial in attracting the largest possible number of tenderers and increasing competition. Ample participation also protects against bribery, favoritism, nepotism, and collusionforms of corruption that become difficult to sustain when many actors have stakes in the process. (Public Procurement Asia/Pacific, Part 1.2.) A Member will conduct its business fairly, honestly and with integrity.
2.
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(Guam Chamber of Commerce Code of Ethics, Principle I 5.) 3. A Member should conduct its business within the spirit as well as the letter of the law. (Guam Chamber Ethics, Ethical Commentary IV-1.)
F.
To act in good faith: This Chapter requires all parties involved in the negotiation, performance, or administration of territorial contracts to act in good faith. (5 GCA 5003.) This is clearly a positive duty and not a standard of passive abstention from bad faith. 1. Good faith means honesty in fact in the conduct or transaction concerned. (13 GCA [UCC] 1201(13); see 5 GCA 5002, quoted above, for the application of principles of the UCC to the Procurement Act.) Under the UCC, good faith has developed to mean both a subjective element of honesty in fact and an objective element of the observance of reasonable commercial standards of fair dealing. (See, Official Comment 20, UCC 1201, 2005 Edition.) Bad faith shall not be assumed. Specific findings showing reckless disregard of clearly applicable laws or regulations must support a finding of bad faith. (2 GAR 9104(a)(3).) Note that the duty of good faith, as strictly defined above, is perhaps more limited in scope than the broader phrased policy and purpose to ensure the fair and equitable treatment of all persons who deal with the procurement system, discussed above (5 GCA 5001(b)(4)). Thus, beyond the duty to act in good faith, the Procurement Act is to be construed and applied ... to ensure the fair and equitable treatment of the parties. Certainly, both obligations work hand in glove to require honesty, impartiality and fairness in the procurement processes.
2.
3.
G.
To provide increased economy in territorial activities and to maximize to the fullest extent practicable the purchasing value of public funds of the Territory (5 GCA 5001(b)(5)). 1. All specifications shall seek to promote overall economy for the purposes intended.... (5 GCA 5265.)
The Guam Chamber Code of Ethics is noted in this paper, since its Small Business Committee membership was the intended original audience of this paper. The author had the principal hand in writing the Code of Ethics over two decades ago, so is also falling prey to pride of authorship. In any event, they are hardly irrelevant to either the private or public procurement participants. In addition to measures specifically aimed at ensuring the integrity of procuring entities, measures targeting corporate integrity are needed to reduce the risk of corrupt practice in public procurement. (Public Procurement Asia/Pacific, supra, Part 1.3.)
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2.
Objectives of the territory's supply management program include preventing waste; continuing utilization of supplies; and obtaining a fair return of value upon disposal of supplies. (2 GAR 8102(a).)
H.
To foster effective broad-based competition within the free enterprise system (5 GCA 5001(b)(6)). 1. The requirement of fair and open competition wherever practicable lies at the very heart of the Guam Procurement Act. a. The admonition to foster is a positive duty. Foster is not a passive verb; it connotes sponsoring, promoting, maximizing, encouraging, supporting and advancing competition. Foster requires action, not lipservice. Simply having apparent competition does not fulfill the explicit action required. Competition must be made effective. Fostering effective competition requires action, not lipservice. Thus, genuine competition should always be sought, not avoided. New players should be encouraged and the usual suspects must be encouraged to keep their game sharp. Convenience or administrative expediency is no excuse for failing to foster a competitive solicitation regime. Failure to solicit and foster competition is almost always present in cases of corruption or undue influence. Having a high number of bidders not only increases the chances of receiving responsive bids but also diminishes the risk of collusion and bidding cartels, and reduces opportunities for favoritism and nepotism. Moreover, strong participation typically reinforces scrutiny of the procurement, as more competitors have an interest in the proceedings. (Public Procurement Asia/Pacific, supra, Part 1.2.)
b.
c.
d.
2.
All procurement of supplies and services shall, where possible, be made sufficiently in advance of need for delivery or performance to promote maximum competition and good management of resources. (5 GCA 5010.) After bid opening, no changes in bid prices or other provisions of bids prejudicial to ... fair competition shall be permitted. (5 GCA 5211(f).) All specifications shall seek to ... encourage competition in satisfying the Territorys needs, and shall not be unduly restrictive. (5 GCA 5265.) It is the policy of Guam that specifications permit maximum practicable competition consistent with obtaining supplies and services that are
3.
4.
5.
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adequate and suitable for its needs.. (2 GAR 4102(a)(1). 6. When for any reason collusion or other anti-competitive practices are suspected among any bidders or offerors, a notice of the relevant facts shall be transmitted to the Attorney General. (5 GCA 5246.) a. For the purposes of this Section, an anticompetitive practice is a practice among bidders or offerors which reduces or eliminates competition or restrains trade. An anticompetitive practice can result from an agreement ... or result from illicit business actions.... (2 GAR 3126(a).) Anti-competitive practices include resale price maintenance. The practice of resale price maintenance consists of an agreement between a manufacturer and a distributor or a dealer to fix the resale price of a supply.... (2 GAR 3126(e)(3).) Although anti-trust Supreme Court case law has arguably relaxed the standard of review of resale price strictures to a reasonableness standard, this provision continues the per se analysis from older case law.
b.
7.
Unless otherwise authorized by law, all territorial contracts shall be awarded by competitive sealed bidding.... (5 GCA 5210(a).) Emergency procurements shall be made with such competition as is practicable under the circumstances.... (5 GCA 5215.) All unsolicited offers [any offer to the government other than one submitted in response to a solicitation] considered as being desirable shall be subjected to the Competitive Sealed Bidding process.... (5 GCA 5219(e).) Fair and open competition is a basic tenet of public procurement. Such competition reduces the opportunity for favoritism and inspires public confidence that contracts are awarded equitably and economically. (MPC Official Commentary No. 3 to MPC 3-201, which is the same as 5 GCA 5210(a).) A Member should engage in fair, free and open competition with its competitors (Guam Chamber Ethics, Ethical Commentary III-2.) So vital is competition to government procurement that the US Federal government requires every agency and procuring activity in it to have a Competition Advocate (FAR Subpart 6.5.) a. The competition advocates shall (a) Be in positions other than that of the agency senior procurement executive; (b) Not be assigned any duties or responsibilities that are inconsistent with [the duties and responsibilities specified in ] 6.502; and (c) Be provided with staff
8.
9.
10.
11.
12.
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or assistance (e.g., specialists in engineering, technical operations, contract administration, financial management, supply management, and utilization of small business concerns), as may be necessary to carry out the advocates duties and responsibilities. b. Agency and procuring activity competition advocates are responsible for promoting the acquisition of commercial items, promoting full and open competition, challenging requirements that are not stated in terms of functions to be performed, performance required or essential physical characteristics, and challenging barriers to the acquisition of commercial items and full and open competition such as unnecessarily restrictive statements of work, unnecessarily detailed specifications, and unnecessarily burdensome contract clauses.
I.
To provide safeguards for the maintenance of a procurement system of quality and integrity (5 GCA 5001(b)(7)). 1. Certain steps in procurement, such as needs assessment, definition of technical specifications, and contract execution, are particularly vulnerable to corruption as they often involve a high degree of discretionary decision making. Also, control and oversight in these stages are particularly difficult to achieve. Countries are therefore encouraged to ensure that procurement rules cover the entire procurement cycle, from planning to delivery, and that such comprehensive frameworks exist at all administrative levels. (Public Procurement Asia/Pacific, supra, Part 1.5.) Each procurement officer shall maintain a complete record of each procurement. The record shall include the following (5 GCA 5249) : a. the date, time, subject matter and names of participants at any meeting including government employees that is in any way related to a particular procurement; a log of all communications between government employees and any member of the public, potential bidder, vendor or manufacturer which is in any way related to the procurement; sound recordings of all pre-bid conferences; negotiations arising from a request for proposals and discussions with vendors concerning small purchase procurement; brochures and submittals of potential vendors, manufacturers or contractors, and all drafts, signed and dated by the draftsman, and other papers or materials used in the development of specifications.
2.
b.
c.
d.
3.
[P]rotecting the integrity of the procurement process is one of the reasons

Page 14
for the requirement to create and maintain a procurement record. (In the Appeal of Latte Treatment Center, Inc., OPA-PA-08-008, Decision at p 17.) No procurement award shall be made unless the responsible procurement officer certifies in writing under penalty of perjury that the aforementioned procurement record was maintained and that it is complete and available for public inspection and this certification must be a part of the procurement record. (Id.; 5 GCA 5250.) 4. Public employment is a public trust.... Public employees must discharge their duties impartially so as to assure fair competitive access to governmental procurement by responsible contractors. Moreover, they should conduct themselves in such a manner as to foster public confidence in the integrity of the territorial procurement organization. To achieve the purpose of this Chapter, it is essential that those doing business with the Territory also observe the ethical standards prescribed herein. (5 GCA 5625.) Ethical Standards a. For Government Employees: Any attempt to realize personal gain through public employment by conduct inconsistent with the proper discharge of the employees duties is a breach of a public trust. In order to fulfill this general prescribed standard, employees must also meet the specific standards set forth in 5628 through 5633 of this Chapter. (5 GCA 5626(a).) (1) In the Latte Treatment Center appeal, supra, there was mention that the agency representative had, at one time or other, been given air fare and/or accommodation to visit each of the offerors. There was a specific allegation of such a breach of ethics standards at issue in the appeal. The Decision accepted that the payments may have been an improper gratuity, if proven, but found no specific, credible evidence had been presented to prove the allegation. The Public Auditor did find, though, that the employee should have been recused from any consideration of or involvement with the solicitation, and that the employees appearance of impropriety is a serious impairment to the public confidence and integrity of the solicitation process.... (Id., at p 15.) The Public Auditor required, in any event, proof of a connection between any payment by the contractor/offeror and the relevant solicitation. This nexus issue arises from the very limited jurisdiction of the Public Auditor over ethics complaints, as discussed in Article XVIII.E.6.b below.
5.
(2)
b.
For Non-Government Employees: Any effort to influence any public

Page 15
employee to breach the standards of ethical conduct set forth in this Section and 5628 through 5633 of this Chapter is also a breach of ethical standards. (5 GCA 5626.) Those sections deal with Conflicts of Interest, Disclosure Requirements, Gratuities and Kickbacks, Prohibitions Against Contingent Fees, Restrictions on Contemporaneous Employment of Present and Former Employees, and Use of Confidential Information. (1) A Member should avoid taking unfair advantage of its customers, suppliers, competitors and employees. (Guam Chamber Ethics, Ethical Commentary I-2.) A Member will accept its rights and obligations for conducting business within a framework of a democratic system of laws. (Guam Chamber Ethics, Principle IV.)
(2)
c.
Examples of specific standards: (1) Gratuities, kickbacks and favors (5 GCA 5630). It is a breach of ethical standards: (a) to give or take a gratuity. A gratuity is anything of more than nominal value unless there is adequate consideration. for a subcontractor to offer payment, gratuity or employment to get a subcontract or order from a prime contractor. for any contractor, subcontractor or associate to give, and for any government employee to accept, a favor or gratuity during the pendency of any matter related to procurement. A favor is anything, including raffle tickets, of more than deminimus value and whether intended for the personal enjoyment of the receiver or for the department or organization in which they are employed ... whether or not such favor or gratuity may be considered a reimbursable expense of the Territory.... i) Query whether these examples are a favor or gratuity?: a) A contract requires payment for certain removal services, as well as other more significant matters. The contractor writes to the head of the
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(b)
(c)
agency and its procurement officer and says, I received approval from our company to authorize the moves for the department at no charge to you. This is a one-time approval and were happy to do it for you. b) Under the same contract, repairs due to rodent damage is not covered as part of the agreed services. The Contractor writes to the head of the agency and says, in the past we have had thousands of dollars worth of damage resulting from rodents and have managed to repair the damaged equipment without charge to the agency, however, we cannot continue to do so. There are currently several machines in need of rodent repair work. The total cost to replace one piece of equipment is $17,000, but we will replace it at no charge if you will assure us you have implemented a rodent infestation treatment plan. A contractor agrees to hold a partnering meeting with staff of a GovGuam agency, all expenses paid for or justified and reimbursable to the contractor under the contract, in, say, Las Vegas.
c)
(2)
Conflicts of interest: Under 5 GCA 5628(a), [i]t shall be a breach of ethical standards for any employee to participate directly or indirectly in a procurement when the employee knows that: (a) the employee or any member of the employees immediate family has a financial interest pertaining to the procurement; a business or organization in which the employee, or any member of the employees immediate family, has a financial interest pertaining to the procurement; or any other person, business or organization with
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(b)
(c)
whom the employee or any member of the employees immediate family is negotiating or has an arrangement concerning the prospective employment is involved in the procurement. (d) The term financial interest includes ownership of any interest or involvement in any relationship from which a person has recently received, or is entitled to receive, more than $2,500 per year or equivalent. (5 GCA 5601(e).) The term direct or indirect participation includes involvement through decision, approval, disapproval, recommendation, preparation of any part of a purchase request, influencing the content of any specification or procurement standard. (5 GCA 5601(d) See, In the Appeal of Teleguam Holdings, LLC dba GTA Telecom, OPA-PA-10-002, infra, Article XXIV. Query whether a government employee who directs the CPO to issue a task order authorizing a purchase order to be placed with a company employing the daughter of the employee may implicate the conflict of interest prohibition?
(e)
(f)
(g)
6.
Other standards of conduct a. 5 GCA 7102 sets the standard of care applicable to government officials when certifying availability or, or spending, public funds: (1) Any officer, agent, contractor, or employee of the Executive Branch of the government of Guam who is charged with or assumes responsibility for the certification of availability of funds or the spending of money belonging to the territory of Guam, including the Governor and Lt. Governor of Guam, stands in a fiduciary relationship to the people of Guam in regard to the management of public money.
b.
4 GCA Chapter 15 contains provisions dealing generally with the standards of conduct required of elected and appointed officers and employees of the government. 4 GCA 15201 et seq. specifically contain provisions relative to standards regarding gifts, confidential information, fair treatment, conflicts of interest, contracting, and disclosure requirements for such persons.
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c.
The Public Official Financial Disclosure Act of Guam (5 GCA 13101 et seq.) requires that certain government officials file annual financial disclosure statements. (1) PL 30-79:1 extends that requirement to all individuals who are given or delegated authority by an elected official or an appointed official to have sole authority to enter into contracts for procurement or change order. Exempt are classified employees who do administrative processing but do not have discretion on awards. PL 30-79 was vetoed by the Governor, who was of the opinion that the law is inefficacious since no single person has the authority to enter into procurement contracts, given the number of reviews and approvals that must be obtained after the contract is awarded, including the AG, BBMR as well as the Governor. The law was nevertheless enacted by override vote. The Governor raises an interesting point, and it will be interesting to see how enter into, as used in the law, is interpreted, and if approval as indicated by the Governor is interpreted to be the same thing or something else. It will also be interesting to see if there is actually any application of the law to anyone who is not already subject to the Disclosure Act; the author, who considers any extension of the Disclosure Act not a bad thing, nevertheless wonders what fact situation gave rise to the law in the first place.
(2)
(3)
J.
To require public access to all aspects of procurement consistent with the sealed bid procedure and the integrity of the procurement process. (5 GCA 5001(b)(8).) 1. The [procurement] record required by 5249 of this Chapter [see Article II.I.2 above] is a public record and, subject to rules promulgated by the Public Auditor, any person may inspect and copy any portion of the record. (5 GCA 5251.) a. b. To date, the Public Auditor has not promulgated any such rules. This section ( 5249) is modeled after MPC 1-401, Comment number 1 to which says, [t]he purpose of this provision is to achieve maximum public access to procurement information consistent with appropriate consideration of safeguards for contractors and employees.
2.
The Superior Court is given jurisdiction to hear a complaint by any

Page 19
member of the public to enjoin a governmental body from withholding procurement data.... This is an expedited proceeding, and the complainant is entitled to costs and attorney fees if she prevails; further, the matter could result in Civil Service action being taken against a government official who has acted arbitrarily or capriciously. (5 GCA 5485.) 3. Consider more broadly the Freedom of Information Act, known also as the Sunshine Act 5 GCA, Div. 1, Chpt 10, 10101 et seq. a. The author is of the view that the FOI content and process rules are not adequately responsive to the needs of the procurement process. Rules from the Public Auditor to facilitate and enforce access to the procurement record would be in keeping with the spirit to provide for the expeditious resolution of controversies, as mentioned in 2 GAR 12101.
K.
Policy in favor of planned procurement 1. All procurement of supplies and services shall, where possible, be made sufficiently in advance of need for delivery or performance to promote maximum competition and good management of resources. (5 GCA 5010.) Delivery time is not as critical as low price: Delivery and performance timing is obviously an important condition in making any contract. However, under the procurement law, consistent with the policy of planned procurement, such timing is not paramount to price. Indeed, it may only be considered a factor in making an award, and a priori responsiveness, in certain circumstances. a. Except in an emergency [which would presumably only be conducted under the emergency procedures and conditions of 5 GCA 5215], lower bids are generally preferred to shorter delivery or performance bids. (2 GAR 1102.03.) 5 GCA 5010: Delivery time may be considered as a factor in making an award to a responsive bidder ONLY IF: (1) such bidders average delivery time is at least ten percent shorter shorter than the average delivery time of a lower price responsive bidder, AND IF, the price offered by the faster delivered bidder does not exceed 105% of the lower price bidder.
2.
b.
(2)
3.
The Procurement Record shall include the requesting agencys determination of need. (5 GCA 5249(e).)
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4.
Consider general principles laid out in FAR Part 7 (Acquisition Planning) and Part 11 (Describing Agency Needs). a. The purpose of this planning is to ensure that the Government meets its needs in the most effective, economical, and timely manner. (FAR Subpart 7.102.) Acquisition planners address the requirement to specify needs, develop specifications, and to solicit offers in such a manner to promote and provide for full and open competition with due regard to the nature of the supplies and services to be acquired. (FAR Subpart 7.103(c).) (a) Acquisition plans start with a statement of need. (Subpart 7.105(a)(1).) If the acquisition planning is being done prior to preparing a budget, the agency will have to analyze its needs in a thorough manner as part of the acquisition plan. (Competitive Negotiation, Second Edition, Ralph C. Nash, Jr., John Cibinic, Jr., and Karen R. OBrien, The George Washington University, Law School Government Contracts Program, p. 41, cited hereafter as Nash, Cibinic and OBrien.)
b.
c.
Acquisition planning should begin as soon as the agency need is identified, preferably well in advance of the fiscal year in which contract award is necessary. (FAR Subpart 7.104(a).) Requirements and logistics personnel should avoid issuing requirements on an urgent basis or with unrealistic delivery or performance schedules, since it generally restricts competition and increases prices. (FAR Subpart 7.104(b).) Competition is the most fundamental goal of acquisition planning because it is believed that obtaining competition is the best method of ensuring that the Government will receive the supplies and services it needs at fair and reasonable prices. Competition also furthers the [legislative] goal of providing all qualified sources an opportunity to participate in the procurement process. (Nash, Cibinic and OBrien, p 85.)
d.
e.
5.
Lack of advance planning does not justify noncompetitive procurement. (Nash, Cibinic and ONeal, p. 38.) a. 41 USC 253 and 10 USC 2304 (f) : In no case may the head of an agency ... (5) enter into a contract for property or services using
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procedures other than competitive procedures on the basis of lack of advance planning. 6. The author offers the observation that most procurement mistakes, disputes and protests would be avoided by assiduous needs assessment and planned procurement, including appropriately matching needs with carefully considered and drawn specifications. See discussion of Specifications in Article XIV, below.
L.
Policy in favor of local procurement (5 GCA 5008). 1. All procurement of supplies and services shall be made from among businesses licensed to do business on Guam.... Procurement of supplies and services from off Guam may be made if no business for such supplies or services may be found on Guam or if the total cost F.O.B. job site, unloaded, of the same supplies or services obtainable from a business on Guam is not more than 115% of the off-island cost. Thus, as between an on-island bidder and an off-island bidder, the off-island bidder loses unless its bid is no more than 85% of the on-island bidder. Putting numbers to it, an on-island bidder with a $100 bid price wins over an off-island bidder with a bid price of $85.01. Award to an off-island vendor without a comparison to the price or availability of local vendors is inconsistent with [the local preference provision] 5 GCA 5008. Without the required cost analysis, the record does not support an award to [an off-island bidder]. (In the Appeal of Emission Technologies, Inc., OPA-PA-07-002, p 12; note, however, this Decision was vacated by Writ of Mandate issued by the Guam Superior Court, on other issues: TRC Environmental Corporation vs. Office of the Public Auditor, SP 160-07.) Businesses licensed to do business on Guam: a. b. Must maintain an office or other facility on Guam Plus one of the following: (1) Manufacturing which adds at least 25% value using US Citizens, permanent residents or authorized workers who are citizens of the old Trust Territory. Regularly carries inventory for regular immediate sale of at least 50% of supplies to be procured. Retail or wholesale location that regularly carries an inventory on Guam of items of similar nature to those sought
2.
3.
4.
(2)
(3)
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of a value of at least half the bid value or $150,000 (whichever less). (4) Service business actually in business, doing substantial portion on Guam, hiring at least 95% US Citizens, permanent residents or authorized workers who are citizens of the old Trust Territory.
5.
Local preference may not be applicable to construction contracts, notwithstanding any lore to the contrary. a. As first stated, the local preference provision applies to procurement of supplies and services. It does not say it applies to construction. The plain meaning of supplies differentiates it from both construction and services. The question is whether construction is included within the definition of services? Each of those terms are specifically defined in 5 GCA 5030: (1) (g) Construction means the process of building, altering, repairing, improving, or demolishing any public structure or building, or other public improvements of any kind to any public real property. It does not include the routine operation, routine repair, or routine maintenance of existing structures, buildings, or real property. Thus the process of performing works of improvement does not include the routine services of operation, repair and maintenance. (s) Services means the furnishing of labor, time or effort by a contractor, not involving the delivery of a specific end product other than reports which are merely incidental to the required performance. Construction involves the delivery of a specific end product except in the case of demolition, and then it may be considered that a leveled site is also an end product.
(2)
b.
Evidence that construction is not intended to be included within the term services is found in the law and regulations. (1) 5 GCA 5261: The Policy Office shall promulgate regulations governing the preparation, maintenance, and content of specifications for supplies, services and construction required by the Territory. 5 GCA 5262: (a) The Chief Procurement Officer shall prepare, issue, revise, maintain and monitor the use of specifications for supplies and services required by the Territory.
(2)
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(b) The Director of Public Works shall prepare, issue, revise, maintain and monitor the use of specifications for construction required by the Territory. (3) 2 GAR 3109(b): "Competitive sealed bidding is the preferred method for the procurement of supplies, services, or construction." 2 GAR 3111: In accordance with 5 GCA 5213 (Small Purchases) of the Guam Procurement Act, this Section is established for procurement of less than $15,000 for supplies or services and less than $50,000 for construction. In each of these cases, if services was meant to include construction, it would have been unnecessary to separately mention or provide for it. The fact that construction is not specifically mentioned or clearly implied in the local preference provision, when it is so clearly included elsewhere, is strong evidence, from a statutory interpretation standpoint, that construction was not intended to be subjected to that preference.
(4)
(5)
6.
By Executive Order 2000-25, Governor Guiterrez purported to override the effect and intent of the Local Preference provisions of the Guam Procurement Law, to give additional preference to local consultants or providers of educational training and instruction to GovGuam departments and agencies. This preference was not based on a cost comparison but provides a blanket preference simply on the basis of being on-island. The author does not believe the Executive has the power to make or remake any law, and that this Order conflicts directly with Guam law, beginning with 5 GCA 5004(b), discussed below. Nor does the Governor have any procurement rule making authority, which has been reposited in the Policy Office: see Article III.B.3 below. The Federal government (Buy American Act; see FAR Part 25.000, http://www.acquisition.gov/far/current/html/Subpart%2025_1.html), as well as State and municipal governments across the US and abroad have various forms of local preference provisions. (Just search online and see, e.g., http://www.oregon.gov/DAS/SSD/SPO/reciprocal_detail.shtml.) In In the Appeal of Teal Pacific, LLC, OPA-PA-09-002, (dismissed when the Public Auditor recused herself), the Appellant argued that the Guam local preference provision is an unconstitutional and inorganic violation of its right to equal protection. The author has sympathy for the agency's position that it is its duty to apply the law, not determine it, and suspects the Public Auditor might reach the same result: that issue is for a court to determine. But see, Appeal of Interior Landscapes, MSBCA No. 1231 May 28, 1985,
7.
8.
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where the Maryland State Board of Contract Appeals held (at p. 6) that it was within its powers to pass on the constitutionality of a preference statute for disadvantaged businesses, particularly where it is incidental to, and reasonably necessary, to the Boards power to decide procurement appeals, recognizing, also, that its decisions were always subject to judicial review. a. Note that a Federal Appeals Court has ruled unconstitutional a Federal set-aside provision favoring women-owned businesses based on the ruling that no relevant findings were made to substantiate the presumptions underlying the alleged purpose of the act. (See, Rothe Development Corp. v. Department of Defense, United States Court of Appeals for the Federal Circuit, 2008-1017, http://www.cafc.uscourts.gov/opinions/08-1017.pdf .) The ultimate ramifications and ripple effect of this decision are yet to be known. The author believes that the Rothe Development rationale would be inapplicable to an analysis of local preference rules. There, the issue was alleged discrimination based on status (women only in that case, but status issues also include race, religion, etc.) Status issues usually attract strict judicial scrutiny under an equal protection analysis. Local preference provisions involve commercial issues of geography only and, as such, do not enjoy such precious protection of the courts. Indeed, the current legal consensus seems to be that the Commerce Clause and its protection of interstate commerce may not apply to Guam.
b.
M.
Policy in favor of Bio-friendly products 1. Public Law 21-22 purports to change the Procurement Regulations to insure that in all purchases of goods by the government of Guam, when possible, emphasis shall be placed on the purchase of products that are biodegradable, reuseable, recyclable, or recycled, or any combination. The law did not direct the Policy Office to change its regulations, but its regulation 2 GAR 1102.02 purports to be in compliance with the law. 1102.02 gives a ten percent (10%) advantage to any bidder of products meeting those bio-friendly characteristics. Moreover, it specifically provides that the 10% bid advantage is to be given in addition to the 15% local preference, with the express effect that there could be a 25% bid advantage when bid-friendly products are bid by local companies meeting the local preference requirements.
2.
N.
The Procurement Act applies to almost all GovGuam purchases. 1. This Chapter shall apply to every expenditure of public funds irrespective of their source, including federal assistance funds ... by this Territory, acting through a governmental body .., under any contract... (5 GCA 5004(b);
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cf, In the Appeal of L.P. Ganacias Enterprises, Inc., dba RadioCom, OPA-PA06-003.) 2. Exceptions are made (id.) for a. b. Pre-emptive federal government funding regulations, if any. Grants or inter-governmental contracts. (1) The author understands that most Federal grants and funding regulations include a provision that local procurement laws are to be followed (see, e.g., 32 CFR 33.36(b)(2)), effectively making this particular exception, the author believes, inapplicable to such grants. ( 33.36 more broadly affects many other local procurement laws and regulations, such as overriding the Guam local preference provision ( 33.36(c)(2).) Each grant should also be studied to determine if and to what extent it is subject to local law.
c.
Gifts, bequests and other such private grants and donations, or cooperative agreements.
3.
Where a procurement involves the expenditure of federal assistance or contract funds, or other federal funds as defined by Section 20 of the Organic Act of Guam, all persons within the government of Guam shall comply with such federal law and regulations which are applicable and which may be in conflict with or may not be reflected in this Chapter. (5 GCA 5501.)
4.
5 GCA 5125 expressly states all agencies of the government shall be governed by most of the various Articles of the Procurement Act. This is reiterated by the Legislatures express declaration of intent to require all Executive Branch bodies ... to be governed to the maximum extent practicable by [the Procurement Act]. It specifies only one qualification to that emphatic rule: This provision requires any governmental body ... to conduct their procurement activities pursuant to [the Procurement Act], except insofar as said [Act] establishes and effects a system of centralized procurement. a. 5125 says all specified Executive government bodies shall be governed by Articles 1, 3, 6, 7, 10, 11, and 12" of the Procurement Act, except to the extent that any such government body ... may be exempted from the centralized procurement regime of Article 2....
5.
A governmental body to whom the Guam Procurement Act applies only

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refers to the executive branch of the government. (5 GCA 5030(k).) Thus, for instance, the Supreme Court of Guam has at one time adopted its own procurement regulations which deviated significantly from the Procurement Act law and regulations, such as apparently deleting entirely the requirement that a bid be responsive, awarding the bid solely on the basis of bidder responsibility. (Procurement Regulations of the Supreme Court of Guam, Promulgation Order 03-07, Sections 5(A)(1)(g) and 5(A)(2), but see Sections 6(D)(3)(a)(ii) and (iii).) Note, however, that the current Judicial Council of Guam Procurement Regulations have superceded those Supreme Court regulations and reinstated the responsive requirement. (See, http://www.guamsupremecourt.com/Information/images/ProcurementRegula tions.pdf; http://www.guamsupremecourt.com/Resolutions/images/JC06-011%20Re% 20Amending%20Procurement%20Regs.pdf.) 6. An interesting question has been presented whether an agreement made by the Department of Chamorro Affairs, in its administration of The Chamorro Village market place, to give exclusive license to one taxi companys use of parking spaces at the Village, is a violation of the procurement law. This news item is reported here and here. The agency justifies the arrangement as a means of improving tourist patronage of the markets. Importantly, it claims it is not paying the taxi company, nor is the taxi company paying it: "We did not go out for bid because we're not paying anyone." Since there is no expenditure of government funds, is the Procurement Act implicated? a. 5 GCA 5004(a) says the Procurement Act applies to contracts made after the effective date of the law. 5 GCA 5004(b), on the other hand, says the Act applies to expenditure of public funds. Does the expenditure condition of subsection (b) delimit the contracts of subsection (a)? Does subsection (a) merely define the implementing date of the law, without reference to expenditures? These are debatable questions. Perhaps other considerations provide more guidance. The definition of contract in 5 GCA 5030 says it includes all types of agreements ... for the procurement of ... services ..., and says that procurement includes otherwise acquiring any ... services .... The taxi agreement evidently requires that the taxi company will provide quality, reliable, clean and excellent service to all its customers, which is expected to benefit the market vendors, who are tenants of the agency: Theyre bringing clients to the vendors. This possibly gets closer to an answer whether this implicates the procurement laws, but only if we ignore the expenditure issue. The Guam Attorney General has considered the question whether the selection of a bank for government deposits should be subjected
b.
c.
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to competitive bidding, given that the government expends no fees, however it does receive a benefit in the form of interest. The AG concluded that the benefit was the functional equivalent of an expenditure, given the policy of the procurement law to provide increased economy in territorial activities and to maximize to the fullest extent practicable the purchasing value of public funds of the Territory. (See, "AG 08-0583" Re: Whether the Government's Consolidated Banking Services are Subject to the Guam Procurement Law.) (1) The AG Opinion followed a New York case, decided before the Model Code was promulgated, which held, a contract which provides for a lesser income to the governmental unit than a competing contract might provide is an expenditure within the meaning [of its procurement law]. (See, Signacon Controls Inc. v. Mulroy, 298 N.E.2d 670.)
d.
This case is perhaps distinguishable from the bank fee situation mentioned above because, here, the government received no direct, quantifiable certain benefit. The author is inclined to conclude that the expenditure of funds aspect is integral to procurement, either as an actual payment or by means of certain calculation of a foregone economic opportunity (benefit); that this situation does not fit well within the procurement law prohibitions. This does not mean that the arrangement is lawful under other laws, it should be noted (nor does the author imply it is unlawful, but if it is not unlawful, the legislature might want to consider the matter). (1) For instance, 5 GCA 87104(l) says it is within the power of the agency to operate the facilities, but only in accordance with the Procurement Act. This section could be read to impose procurement law requirements (including imposing the purposes and policies discussed above) on this contract, when the procurement law, by itself, might not. (See discussion of theunless other wise authorized clause in Article IV.D.4 on procurement methods, below.)
7.
Necessity of certification of availability of funds: Questions have been raised whether a contract, or a solicitation, is valid if there is no express certification of availability of funding made in the contract or as part of the solicitation process. a. It is useful to put this issue into the perspective of agency law prior to discussing it further, because government, like corporations and other entities, who are all principals, operate virtually entirely through agents. The question of certification is premised on whether a contract or other obligation of the government is legally binding
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on the government when an agent violates or exceeds the scope of the agents authority. (1) In terms of entities, such as corporations, this notion of scope of authority is cast in terms of whether an act is ultra vires, which simply means beyond authority. This can take on entirely more important meaning, however, when the principal is a sovereign, because public sovereigns, unlike private entities, have a recognized immunity from suit. Nevertheless, for purposes of government contracting, GovGuam has waived immunity from most Procurement Act claims (5 GCA 5480) and contract claims (the Government Claims Act, 5 GCA Chapt 6). Thus, in this context, agency principles are effectively similar for public and private agency relationships. The law of agency recognizes that many persons who may not be actual agents may be treated as agents. Thus, when a person is imbued with apparent authority the law will treat such person as having actual authority, for purposes of dealing with third parties, even if the principal has not specifically made such person an agent. The law calls this ostensible agency. (See, 18 GCA Chapt 20; particularly, 18 GCA 20104 - 20106, and 20212 - 20215.) Under ostensible authority, a principal is bound to a third party for any act done by an ostensible agent within the scope of his or her ostensible agency. The ostensible agent may be responsible to the principal for breach of authority, but the principal is nevertheless bound to the third party. (This discussion is obviously written with a broad brush, as does the statutory regime as you will notice if you read it, but does frame the assertion accurately; years of case law refine the issues.) The rationale for this insistence on the binding effect of ostensible authority is a practical one. Without it, it would always be a simple exercise to avoid responsibility simply by claiming the agent did not have the authority to do some particular thing or other. The law, through wisdom and experience, puts the onus on the principal to police the authority and bear the risk of delegation of authority, otherwise practically all commercial dealings are put at risk of being disavowed. Who would do business with any agent in that circumstance? From this it is important to notice that when the question of
(2)
(3)
(4)
(5)
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certification is raised, those claiming certification point to obligations or restrictions imposed on government employees to certify funds. They claim that such personal obligation is basis for denying the validity of obligations to third party contractors. The author does not believe that personal obligations of an agent are binding on a third party dealing in good faith with a person having ostensible authority. And dont forget, that the law requires the government to deal in such good faith (5 GCA 5003), so bidders and vendors clearly have the right to rely on the expectation that solicitations and contracts presented to them by agents of the government are binding and valid as presented. b. The Guam Attorney Generals Office has discussed the matter of certification of funding as a condition for the validity of contracts in a formal letter to Senator Benjamin J.F. Cruz of date December 29, 2010. (1) The letter acknowledged that, generally, there is a place on government contracts for a certifying officer to indicate certification of funding. It concluded, however, [w]e have been unable to find any statute requiring a certifying officer to sign, as an affirmative action, a contract certifying that sufficient funds to pay for the contract exist. (a) The letter noted that Executive Order No. 2007-02 requires evidence of funding to meet the obligations or proof that funding is available for the entire length of the contract. The AG determined that such certification need not appear on the face of the contract. The letter noted that 4 GCA 14104(a)(1) addressed the accountability of disbursing and certifying officers, but the requirement does not indicate when a certifying officer is to certify funds or on what type of documents the certification is to be placed. The letter finally noted that 5 GCA 22401(a) prohibits the government from entering into contracts if the amount appropriated for that contract or the funds for that contract are insufficient to cover the contract to the end of its full term. The letter said that provision was easy to apply to contracts of a finite number, but that it cannot practicably be made applicable to indefinite quantity contracts, in
Page 30
(b)
(c)
which case so long as there is sufficient funding for each individual task order or purchase order, the provisions of 22401(a) are not violated. (2) 5 GCA 22401(a) is not quite so broad as paraphrased in the letter. It is not expressly an prohibition on the government. In fact, it is expressly a personal obligation of government agents; it is a limitation on their scope of authority, which implicates agency law principles. 5 GCA 22401(a)(1) says: (a) No officer or employee of the government of Guam, including the Governor of Guam, shall ... [m]ake or authorize any expenditure from, or create or authorize any obligation under, any appropriation or fund in excess of the amount available therein, or for other than an authorized purpose....
(3)
The assertion that this expressly personal obligation is not a condition of authorizing or spending funds but only a personal obligation is supported, in the first instance, but the complete absence of any such conditional language and, in the second, by the only prophylactic remedy provided: (a) Any officer or employee of the government of Guam who shall violate subsection (a) hereof shall be subjected to appropriate disciplinary action .... (5 GCA 22401(c).) The rights and obligations of third parties dealing with such agents are not affected; this is clearly a personal obligation of the agent.
(4)
Note that this examination of the question of certification focused entirely on laws dealing with the personal obligations and restrictions of government employees when acting as agent of the government. The author believes the law of ostensible agency is most certainly pertinent to this analysis, but was not discussed (nor was the procurement law discussed). The AG letter is helpful to disprove the arguments of proponents of certification, but incomplete.
c.
In the Appeal of Town House Dept. Stores, Inc., dba Island Business Systems and Supplies [IBSS vs DOE], OPA-PA-10-010 involved a claim by the agency that the solicitation was fatally faulty because, at the time of protest, the agency had not certified availability of funding for the award. (1) Whereas the Attorney General, in the letter mentioned above, examined accountability requirements in other
Page 31
provisions of Guam law, the Appellant argued that the Procurement Law does not require certification for funds as part of the procurement process; to allow an agency to cancel a solicitation by failure to take steps to identify funding after bids are opened would violate the policy implications of 2 GAR 3115(b) and 3115(d)(1)(B)(ii) and 3115(d)(2)(A)(iv). (2) The Procurement Act does not anywhere specifically require that a solicitation or a contract award be made subject to certification. It could have, but did not. And, this was not an oversight because it was aware of the possibility and did expressly require such certification in one very particular, post-award instance: (a) Every contract modification, change order, or contract price adjustment under a construction contract with the Territory in excess of Five Thousand Dollars ($5,000) shall be subject to prior written certification by the fiscal officer.... In the event that the certification of the fiscal officer ... discloses a resulting increase in the total project budget or the total contract budget, the Director of Public Works ... shall not execute or make such contract modification, change order, or adjustment in contract price unless sufficient funds are available therefore.... (5 GCA 5307.)
(3)
When the law, in one part, very explicitly requires an act to be done in one circumstance, but does not require the same act to be done in another related circumstance, there is an implication that the act in the second circumstance is not necessary. This is particularly the case when the second circumstance is one of general application and the first one of specific application, since it dovetails with the rule of construction that specific rules take priority over general rules.
d.
From all this, the author concludes that there is no requirement that a solicitation or contract award is subject to any particular form of fiscal certification.
O.
Making and keeping determinations. 1. Throughout the procurement law and regulations, procurement officers are meant to make determinations. The author takes the view that any required determination, including a determination of what is the best
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interests of the Territory: a. should be articulable and kept in some record form which includes an explanation of the basis for the determination, requires a reasoned and deliberative consideration and balancing of all the competitive policies of the procurement act, including fair and equitable treatment of all parties, and must not be impulsive, partial, deceptive, arbitrary, unreasonable or capricious, let alone contrived or implausible. Note, that a best interest determination is entirely dependent on the circumstances of each case. For instance, while it is expressly stated that inadequate specifications may be sufficient reason to reject all bids, it is not an express reason to cancel a solicitation; on the other hand, it may be in the best interest, in both instances, if the supplies, services, or construction being procured are no longer required. (Compare 2 GAR 3115(d)(1)(B) and (d)(2)(A).) In other instances a finding of best interest may be conditioned, e.g., upon a finding of encouraging effective competition or otherwise promoting economies. (5 GCA 5237(b)(2).) (1) That said, it should follow that a mere conclusory statement that something is in the best interests of the territory should be found to be insufficient without further elaboration. A best interest determination requires a conscious consideration of all alternative interests and a rational weighing of competing interests, with due regard to any express legislative policy applicable to an interest. It is worth considering the differences between the showing required for the Territorys best interest in the context of certain determinations, and the weighty showing of the lesser substantial interest required to lift the automatic stay (Article XVII.D, below).
b.
c.
d.
(2)
(3)
e.
While not directly dealing with procurement determinations, in an analogous situation involving the Civil Service Commissions decision to reconsider a prior final decision, the Guam Supreme Court said, We explicitly hold here that where the CSC exercises its power to reconsider a final decision without articulating in its decision a reasoned basis for doing so, the exercise is inherently arbitrary and capricious. Consequently, a judgment made pursuant to such an arbitrary exercise of power is reversible as an abuse of
Page 33
discretion. (In re Department of Agriculture v. CSC (Rojas), Amended Opinion on Rehearing, 2009 Guam 19, at 31; emphasis added.) f. In the Guam Education Financing Foundation appeal Decision, OPA-PA-09-005, in rejecting the agencys initial decision that the protest was untimely, the Public Auditor observed, DPW initially found the GEFFs protest was untimely, but it did not state the reasons for making this finding. (At p. 5; emphasis added.) In a Federal solicitation protest decided by the Comptroller General, the decision upholding the protest noted [t]he only documentation provided by the agency is an email from the transportation officer sent after the protest was filed in response to a query as to why he considered Superiors tender to represent the best value. ... [T]he record does not provide a reasonable basis for the best-value award decision, but only evidences that Superiors tender was selected because the transportation officer was familiar with that firm and its past performance. (In the Matter of Biblia, Inc., Comp. Gen. B-403006, September 13, 2010.)
g.
2.
Written determinations required by this Chapter [the Procurement Act] shall be retained in the appropriate official file of the Chief Procurement Officer or the purchasing agency. (5 GCA 5020.) a. 5 GCA 5020 is adopted verbatim from MPC 1-201, as recognized in the Compilers note. Model Regulations implementing the Model Code equivalent of 5 GCA 5020 require: (1) Where the Procurement Code or these regulations require a written determination; the officer required to prepare the determination may delegate its preparation, but the responsibility for and the execution of the determination shall not be delegated. ( R1-201.01.1.) Each written determination shall set out sufficient facts, circumstances, and reasoning as will substantiate the specific determination which is made. (R1-201.01.2.) While an officer is responsible for the execution of the written determination, other personnel, particularly technical personnel and appropriate personnel in the Using Agency, are responsible for furnishing to the cognizant procurement official, in an accurate and adequate fashion, the information pertinent to the determination. (R1-201.01.3.)
b.
(2)
(3)
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(4)
Each written determination shall be filed in the solicitation or contract file to which it applies, shall be retained as part of such file for so long as the file is required to be maintained, and except as otherwise provided by law or regulation, shall be open to public inspection. (R1201.01.5.)
3.
At a minimum, the Model Regulations should be used as a guide to define the meaning and implementation of determinations under Guam law. The author would argue, however, that this model regulation is not simply a guide, it is an implied requirement. a. The author argues that these Model Regulations are integral to implementing the Model Code, as spelled out in the introductory Official Comment mentioned above: [b]ecause this Act intends that the Policy Office adopt implementing regulations, Model Regulations are also available, and must be examined and changed to coincide with the version of this Act actually adopted by the Legislature. (See introductory Official Comment citation under sources of Guam law, Article I.A.3.a above.) This Legislative History all but incorporates by reference the Model Regulations. There is nothing inconsistent in the Model Regulations and the version of the Act adopted by Guam (they are identical insofar as 5020 is concerned), so these Model Regulations having to do with determinations should have expressly been included in the Guam Regulations. Given the requirement to examine the Model Regulations and only make such changes as are necessary to coincide with the Guam version of the Model Code, as well as the duty of the Policy Office to adopt the implementing regulations, the author believes it was not within the discretion or power of the Policy Office to fail to adopt these particular Model Regulations.
b.
c.
4.
As noted in Article XXIII.B.4, below, under 5 GCA 5245 an administrative determination under the Procurement Act is not entitled to a deferential standard of review, even in a court, except in a few specifically identified instances. However, no prior determination shall be final or conclusive on the Public Auditor or upon any appeal from the Public Auditor. (5 GCA 5703.)
P.
A word or two from your author: 1. Notice that there is no policy that says procurement is to be conducted for the convenience or ease of the government or the public. Government
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procurement is very clearly intended to be methodically planned, competitive, transparent and accountable. This is, not coincidentally, the goal of private sector procurement, as well; in a word, its called management. The author takes umbrage at anyone who blames ineffective government management on the government procurement processes. Those within and without the government who complain and editorialize about the cumbersome procurement process fail to understand its principle values, or are just pursuing some other agenda. If the price of freedom is vigilance, the price of a consistently fair, effective and trustworthy procurement process is red tape. Because, when properly understood and used, procurement red tape does not suffocate us, it holds the system and its competing participants together. 2. The author does not doubt that many efficiencies could be had in the procurement system, but would prefer that we all first try to make it work effectively by making it work the way it is designed to work, before tinkering too much with the system. The author believes the most obvious failures and burdens of the Guam procurement system of recent times are due to dysfunctions in operating the system, not the system itself. The first step to making it function properly is to understand and experience how it is meant to work under the existing law, and then make that process function professionally, consistently and routinely. The Guam legislature chose to forego procurement training and education when it adopted the Guam version of the Model Procurement Code. A proposal for a Guam Procurement Institute and Advisory Council: The author believes that much of the frustration that participants, public and private, have with procurement stems from a fundamental lack of knowledge of the theory, law and practice of procurement. For this, the author proposes a Guam Procurement Institute. The author further believes that many of the problems with the procurement framework comes from ad hoc and patchwork changes to the code to address narrow issues, without adequate knowledge of how the whole structure is affected. For this, the author proposes a Procurement Advisory Council. The author has not made up these ideas; as discussed below, they are recommended by the Model Procurement Act. The legislation simply declined to include them when the Procurement Act was first adopted. a. Along with the MPC, the Guam Procurement Act has a Part entitled Coordination, Training and Education (Part E, Article 2 of the Guam Procurement Act.) Guam law and regulation have enacted the Coordination provision, calling for collection and preparation of procurement statistics (5 GCA 5140; 2 GAR 2111; MPC 2-501). But that is all. Guam law does NOT address training and education.
3.
4.
b.
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c.
The MPC ( 2-502) contemplates a Procurement Advisory Council to be funded by the Government to discuss and make recommendations for improvement of the procurement process, and to make studies, analysis and reports as requested. Guam law does not follow that lead, but should. (1) Civil society organizations can complement institutional oversight bodies, but they need to be granted access to relevant information throughout the project cycle to be effective in this important role. The experience of a number of countries shows that such access to information does not necessarily interfere with the confidentiality of information, contrary to an argument commonly advanced to justify the exclusion of public oversight. Australia and Hong Kong, China, for instance, publish procurement plans and provide, as does Korea, ample information about previous and ongoing procurement on Internet sites. Under Indias Right to Information Act 2005, citizens have access to information on procurement processes. Australia, P.R. China, India, Korea, and Singapore make audit reports publicly available for scrutiny. Some countries, like India and Thailand, also empower individuals who are not involved in procurement to bring allegations of corruption to the attention of specialized audit or anti-corruption bodies. (Public Procurement Asia/Pacific, supra, Part 1.4.)
d.
The MPC ( 2-503) goes further and contemplates formation of what it terms a Procurement Institute to conduct or participate in procurement education and training for public and private employees and others, as well as conduct research and maintain a library of resources, to be funded by the Government. (1) See the information available online about the University of Hawaii Procurement Institute at http://www.law.hawaii.edu/uhpi/about.
e.
Official Commentary to MPC 2-503 make the following points: (1) Procurement is a complex process which experience has shown can only be adequately learned over a period of time. Thus training in procurement is vital for new [GovGuam] employees without prior experience in the field. It will accelerate the learning process and will tend to make [GovGuam] procurement personnel knowledgeable and effective in the minimum time.
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(2)
In addition, training courses should also be reasonably available to vendor personnel, university professors, students, and others. Experience has shown that when a vendor or other person affected by the system makes an unnecessary mistake through lack of knowledge of the ground rules of procurement, it causes friction and expense to the [government].
f.
In reaction to certain announcements by the Obama administration to reform Federal government procurement processes, Professors Steve Kelman and Steve Schooner made the following comments (see, Commentary: Achieving effective reform, Federaltimes.com, http://federaltimes.com/index.php?S=4032866.). Steve Kelman is the Weatherhead Professor of Public Management at Harvard Universitys John F. Kennedy School of Government. Steve Schooner is the co-director of the Government Procurement Law Program at George Washington University Law School. (1) The federal procurement system is the worlds most heavily regulated, and a well-established regime of laws, statutes and policies addresses each of the presidents concerns. But rules cant spend money wisely, only people can. And weve got huge people problems.... Generating competition is time consuming and labor intensive. The government needs experienced professionals to, among other things, understand agencies requirements to fulfill their diverse missions, plan contracting solutions to fulfill those requirements, conduct market research to identify the best contractors, solicit those contractors to assure competition and that the government get a good deal, draft and negotiate contracts, manage relationships during contract performance, and perform quality assurance to ensure the government obtains the value it paid for and high levels of customer satisfaction. Proper staffing will contribute more toward responsible fiscal stewardship than another round of studies, legislation or policymaking.
(2)
III.
PROCUREMENT ADMINISTRATIVE STRUCTURE: Policy Office, GSA, DPW, Public Auditor, and Attorney General A. Centralized Procurement Policy: 5 GCA 5120 states the general objective to centralize all procurement activities in the Policy Office, the Chief Procurement Officer at the General Services Administration (CPO/GSA) and the Department of Public Works (DPW).
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1.
The general framework of the centralized procurement regime is that the procurement of most supplies and services is done by the General Services Administration (GSA) and construction work by the Department of Public Works (DPW); the Chief Procurement Officer (CPO) of the GSA has some authority to delegate procurement of supplies and services to government agencies. The procurement of published books and the like, as well as the services of architects, engineers and land surveyors is decentralized by exemption and can be conducted by any agency, without any specific delegation. All of this is discussed in more detail below. All Executive Branch bodies are subject to the general requirements of Guam procurement law and regulation, although certain bodies are authorized (by delegation or law) to directly conduct their own procurement. These bodies are specified in 5 GCA 5125, first paragraph and include GCC, UOG, GPSS, GMHA, GEDCA and GVB. It is the intent [of the Legislature] to require all Executive Branch governmental bodies, including autonomous agencies, ... to be governed to the maximum extent practicable by [the Procurement Act]. (5 GCA 5125, second paragraph.) a. Note the authors comments above in respect of Executive Order 2000-25 and the Governors lack of power to make law in respect of procurement matters, or any other law for that matter. Also note the authors comments in this Article below in respect of the Governors lack of power to promulgate procurement regulation.
2.
3.
Consistency of procurement rules and policies throughout a given country is widely considered desirable. Bidders should not face different procedures when bidding on contracts in different parts of the country or dealing with procuring agencies in different ministries. Without uniform rules, the effectiveness of judicial review and the establishment of steady and predictable practice may also suffer. ... To foster the development of uniform procurement practice and policies, many countries ... have established a central procurement authority. Such authorities do not undertake procurement themselves but rather supervise the individual procuring entities, monitor compliance with the regulatory framework, set and harmonize policies, and recommend reforms. (Public Procurement Asia/Pacific, Part 1.1, supra.)
B.
Policy Office: The Policy Office is meant to be established under the Office of the Governor. It is meant to consist of five members, three government employees selected by the Governor plus the Directors of Administration and DPW; the Director of Administration is the chair. (5 GCA 5101.) 1. Under Guam law (5 GCA 5101) : a. The Policy Office is created in the Office of the Governor and
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comprised of three government employees, all to be appointed by, and presumably serve at the pleasure of, the Governor, plus two ex-officio government Directors (also appointed by the Governor). (1) [T]he Policy Office, operating as it does over the entire government, should be separate from the Department in which is located the General Services Agency. Therefore, it is placed within the Office of the Governor, which is responsible for supporting it. Official Comment of the Committee on General Governmental Operations, 5 GCA 5101.)
b.
There is no statement of qualification for any member of the Policy Office. They hold their positions by appointment or ex-officio without any requirement to know anything about procurement. The Governors Office holds the purse strings for the Policy Office ( 5101(c) and Comment).
c.
2.
The MPC ( 2-101(2)) presented two models of Policy Office composition, an inside one (the model adopted by the Guam legislation) and an outside one, and suggested by Comment that another permutation could be a mixed inside and outside one (a solution the author favors). In either an inside or outside model, it is recommended that the CPO be an ex officio member. (MPC 2-101(2) [Option 2], Commentary 1.) a. The outside model is composed of private, non-governmental persons: (1) the Office is to be comprised of members who shall not otherwise be full-time employees of the [Territory]; and each appointed member shall have demonstrated sufficient business or professional experience to discharge the functions of the Policy Office..
(2)
b.
In determining which model to adopt, the MPC Commentary (no. 6) to 2-101(2) [Option 2] mentions some relevant considerations, one of which may be particularly salient in Guams case: the independence and accountability of the Policy Office.
3.
The Policy Office is responsible for promulgation of Regulations governing procurement, management, control and disposal of all supplies, services and construction to be procured by the Territory. (5 GCA 5102; 5130(b).) a. The Policy Office shall not delegate its power to promulgate
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regulations. (5 GCA 5130(b).) b. The CPO and Director of Public Works have the authority to adopt procedures governing their internal operations, but procedures do not carry the policy punch of, and have less authority than, regulations. These matters are further discussed in Article III.G.12 below in the context of the lack of authority of agencies to adopt their own regulations. Promulgation of regulations (and procedures for that matter) is subject to the rules of the Administrative Adjudication Law. (5 GCA 9107.)) The Attorney General has issued an opinion that GSA has the power to adopt alternative methods of source selection and procurement procedures to implement the alternate method. (Legal Memorandum (GSA 07-1084, June 16, 2008.) It based this power on the authority given GSA to adopt internal operational procedures, 5 GCA 5113(b) and 2 GAR 2104(b). The Public Auditor has decided that this legal opinion is incorrect, and GSA does not have such broad authority. (In the Appeal of Town House Dept. Stores, Inc. dba Island Business Systems and Supplies [IBSS vs GSA], OPAPA-08-012 (decided February 10, 2009).) In the Appeal of L. P. Ganacias Enterprises, Inc. dba RadioCom, OPA-PA-06-003, involved a protest of a sole source award made by Guam GSA on behalf of the Office of Homeland Security, a part of the Office of the Governor. The Decision of the Public Auditor noted at p 10, [t]here is no evidence of delegation to OHS or the Office of the Governor [of] the authority to prepare its own specifications.
c.
d.
e.
4.
The Policy Office is meant to be independent of the Governors executive control, although this has often been observed more in the breach than in practice. This is a scheme devised by the Legislature. It is law. a. The Policy Officess existence and authority is derived from 5 GCA 5101, which follows the scheme set out in the ABA Model Code 2-101. It is the cornerstone on which the entire edifice of the implementation and regulation of procurement law is based. (1) The only mention of the Governors involvement with the Policy Office is that the Governor must appoint three of its members (a majority as comprised by 5 GCA 5101(b)), and the Governors Office must provide support for the Policy Office, including office space and administrative assistance.
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b.
The Official Comment to 5101 states, the Policy Office, operating as it does over the entire government, should be separate from the Department in which is located the General Services Agency. Therefore, it is placed within the Office of the Governor, which is responsible for supporting it. There is no language to the effect that the Policy Office is to be under the control or direction of the Governor. Indeed, it is the basic scheme of the Procurement Act, based as it is on the ABA Model, that the Policy Office is intended to be independent of such control. It contemplates that the Executive Branch will perform the operational functions of procurement, but the policymaking authority will reside in the Policy Office alone. (1) As the Official Commentary No. 1 to the ABA Code, 2101(1) (2000 Edition) explains, jurisdictions which choose the model Guam has chosen, prefer to separate procurement policy making and operational functions, so this [model] establishes a [State] Procurement Policy Office to perform the former duties. Commentary No. 2 elaborates: The separation of policymaking and operational functions can be achieved through the establishment of an independent policy body such as the Policy Office. This Section provides for the placement of the Policy Office ... as an independent entity within the executive branch of the government.... More specific to the inside board composition model [Option 2 of the ABA Model] which Guam adopted, the ABA Commentary Nos. 1 and 2 to Option 2 reiterate and explain, this model provides for centralizing procurement policymaking in a single Policy Office composed of a group of high-level officials.
c.
(2)
(3)
d.
Apart from creating an independent policymaker, all rights, powers, duties and authority related to procurement is centralized and vested in the Policy Office, the Chief Procurement Officer and the Director of Public Works. (5 GCA 5120.) Again, there is no direct role for the Governor to play. Indirectly, the Governor controls the composition of the Policy Office and the selection of the CPO and DPW Director, but whatever power he or she may have must be indirectly exercised through those offices. The author is of the view that the Governor has no power to promulgate procurement regulations or to directly exercise the legal rights, powers, duties and authority vested by the Procurement Act
e.
Page 42
in the Policy Office, the CPO or the Director of DPW, by the clear language and plain meaning of 5120. (1) 5 GCA 5102 and 5130(a) and (b), mandate that only the Policy Office may promulgate procurement regulations. The Introductory Official Comment also expresses the legislative intent that only the Policy Office will promulgate implementing regulations. The Administrative Adjudication Act (5 GCA Chap. 9) provides the mechanism whereby regulations must be adopted and given legal effect (Chap. 9, Article 3, 9300 et seq.). The Policy Office is subject to those provisions. (5 GCA 5130(a), 9301(3), 9102.) The Governor has no approval authority in that process unless expressly required by law. The Procurement Act does not provide that approval authority over the duty of the Policy Office to promulgate procurement regulations. Upon the original enactment of the Procurement Act in PL 16-124, and the proposal of implementing regulations by the Policy Office under Resolution 001-84 (see attachment to E.O. 84-21), Governor Bordallo issued Executive Order 8421, which recited that he was promulgating the procurement regulations by virtue of the authority vested in my by the Organic Act of Guam. (a) It might be noted, as further evidence that the Procurement Act does not grant the Governor any procurement regulation making authority, that PL 179(1) expressly acknowledged the immediate effect of the Procurement Act under PL 16-124, and granted the Governor very specific and limited authority to issue any regulations required under [the emergency procurement provisions of then GC 6959.5] and may do so without regard to the Administrative Adjudication Act, but only until creation of the Policy Office. The Policy Office had obviously come into being prior to EO 18-21.
(2)
(3)
(4)
Under Executive Order 88-6, Governor Ada ordered that all procurement and related activities of the Guam Memorial Hospital Authority be transferred to the Department of Administration General Services Authority. Subsequently, under Executive Order 90-16, he ordered the procurement authority to be transferred back from GSA to GMHA. In each instance he did so by virtue of the authority vested in
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my by the Organic Act of Guam. (a) The authority to delegate procurement authority to government agencies is discussed further below.
(5)
The author has not engaged in any research into the line of demarcation between the respective authorities of the Legislature and the Governor under the Organic Act. On the face of the Procurement Act, however, the Governor clearly had no authority to approve or promulgate the regulations or to exercise the rights, powers, duties or authority of the Policy Office, CPO or Director of DPW. The current decision of one Federal administrative review panel is here noted for its holding that administrative rules adopted under the authority of a Presidential Executive Order cannot usurp the rules adopted under a legislative act. See, Dean vs Office of Personnel Management, November 2, 2010, United States of America Merit Systems Protection Board, 2010 MSPB 213, at 30.
(6)
5.
The Policy Office is an on-again-off-again institution. Presently, it is the authors understanding that it lacks the appointees necessary to function.
C.
GSA: The CPO of GSA shall serve as the central procurement officer with respect to supplies and services. (5 GCA 5113(a).) The CPOs duties include: 1. Procure or supervise procurement of all supplies and services. (1) GSA cannot abdicate its duties and responsibilities as the guardian of the public trust in the procurement process by laying a paper trail from agency heads unsophisticated in our procurement laws ready to compromise on bid specifications in order to achieve their needs at the lowest possible price. GSAs efforts in obtaining BSPs concurrence, contracting PDS just prior to award for clarification of its own bid, and seeking three independent reviews during the protest period from person[s] with little known expertise in telecommunication technologies are all self-serving acts intended to bolster an award to the lowest bidder in the face of procurement ambiguities. Had this solicitation been promptly rebid, as originally advised by Attorney Kono ... the integrity of the procurement process would have been maintained as fair, open and competitive. (Teleguam Holdings, LLC dba GTA Telecom, vs General Services Agency, BSP and Pacific Data Systems, Guam Superior Court, SP 0050-10, Decision and Order, pp 5-6 (unmarked).)
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2.
Delegation of authority. This topic is more fully discussed in Article III.G below. Exercise general supervision and control over all inventories of supplies. a. CPO shall have general supervision of all inventories of tangible personal property, whether warehoused or in use, belonging to the territory or any of its agencies. This responsibility shall not, however, relieve any agency of accountability for tangible personal property and other supplies.... (2 GAR 8102(c).) (1) Note 5 GCA 5130(d) to the effect that regulations shall be adopted to prevent a purchasing agency from acquiring any supply item unless the agency has notified GSA, and GSA has advised (or failed to advise within 10 days) that it cannot supply the item from its surplus supplies.
3.
b.
Sound inspection, testing, warehousing, and inventory practices are called for, and effective means of transferring and disposing of property must be employed. (2 GAR 8102(a).) Ascertain or verify that supplies, services, or construction items procured by such officer conform to specifications. (2 GAR 8102(b).) General supervision of any receiving, storage, and distribution facilities and services maintained and operated by the Office of the Chief Procurement Officer or using agencies. (2 GAR 8102(d).) Using agencies shall notify the CPO of all excess supplies. No using agency shall transfer, sell, trade-in, or otherwise dispose of supplies owned by the territory without written authorization of the Chief Procurement Officer. (2 GAR 8102(e) and second (d); Note: The copying of the Model Code and Regulations into Guam Code and Regulations is replete with typographical and reference errors.) (1) Note Article 7, Ch. 22 of Title 5 GCA ( 22701 et seq.), dealing generally with the inventory and disposition of all surplus and lost/damaged property, including interagency transfers, by the Department of Administration and the Board of Survey. A Cross-Reference note by the Compiler to 22702 states, [t]his section does not apply to surplus supplies, the definition and disposition of which are covered in 5 GCA 5403 as part of the Procurement Law.
c.
d.
e.
f.
Disposal: Surplus supplies shall be offered through competitive

Page 45
sealed bids, public auction, established markets, or posted prices. It is recognized, however, that some types and classes of items can be sold or disposed of more readily and advantageously by other means, including barter. In such cases, and also where the nature of the supply or unusual circumstances call for its sale to be restricted or controlled, the Chief Procurement Officer may employ such other means, including appraisal, provided such officer makes a written determination that such procedure is advantageous to the territory. (2 GAR 8102(h).) g. Prepare, issue, revise, maintain and monitor the use of specifications in accordance with the law and regulations, and this can be delegated to the using agencies, but not vendors. (Note: if this authority is delegated, the laws and regulations applicable to the CPO become applicable to the delegatee agencies notwithstanding the omission of reference to Chapter 9, Article 4 (Specificiations) in 5 GCA 5125.) The CPO can contract with third parties to prepare specifications provided there will be no substantial conflict of interest involved. (2 GAR 4103.) (1) GSA should review the specifications provided by the purchasing agencies to ensure they will result in a procurement that maximizes the purchasing value of public funds and amend such specifications to ensure that purpose is achieved. ( In the Appeal of Guam Publications, Inc., OPA-PA-08-007, p 12.)
h.
Data Collection: The CPO is responsible, together with BBMR and the Public Auditor, to prepare statistical data concerning procurement, usage and disposition of all supplies and services. (2 GCA 5140.) The current Guam GSA web site is rudimentary. For instance, it only includes three Circulars issued in 2009, and none from prior years. These Circulars are important policy and practice statements issued by the CPO under her authority to issue internal operational procedural rules, and it serves the best interests of the Guam community to make these available to the public, consistent with the public access policy, 5 GCA 5001(b)(8).
i.
D.
DPW: The Director of DPW shall serve as the central procurement officer with respect to construction. 1. Duties of the Director of DPW include (5 GCA 5113(c)(2)): a. Procure or supervise the procurement of all construction needed by Guam.
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b.
Establish and maintain programs for inspection, testing and acceptance of construction. Responsibility for selection of methods of construction contracting management, that is, the contracting method and configuration that will most likely result in timely, economical, and otherwise successful completion of the construction project. (2 GAR 5102(a).) Note that this does not empower DPW to alter or establish methods of source selection (that is, bidding methods); it only allows contract management flexibility. This is emphasized by 2 GAR 5108, which says that the methods of contracting management apply to A&E and land surveyor contracts, but For the purpose of acquiring the services, the methods of source selection shall be followed.
c.
E.
Public Auditor 1. The Office of the Public Auditor has had a name makeover and, as a result of PL 30-27, signed into law June 16, 2009, is now to be known as the Office of Public Accountability, but can still be called OPA. a. The preamble to the law states, that the current title of the Office of the Public Auditor appears to imply an office of an individual rather than the function of the office. Oftentimes, the findings of an audit may be attributed to the elected individual, as opposed to an actual finding of the audit or investigation, especially if the audit findings reflect questionable accountability issues. Thus, the name change. The Public Auditor is still the Public Auditor; only the name of the office has changed. (1 GCA 1903, 1906, etc.)
b.
2.
The Public Auditor has the power and jurisdiction to hear any appeal of a procurement protest, as well as appeals from contract disputes and debarment or suspension actions. She also has the power to make certain determinations and adopt certain regulations within the context of the procurement laws. It must be remembered the Public Auditor also has the power and duty to conduct financial and management audits, program evaluation and review, and to inquire into any person having any official relations with any officer in any matter relating to the expenditures of government funds and property, and to report offenses for prosecution to the AG, and to conduct other investigations and render other reports as required. (1 GCA Chpt 19, 1900 et seq.) The role of the Public Auditor in Procurement Appeals will be discussed
3.
4.
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below. F. Attorney General 1. Although the Attorney General has long had the obligation to review all government contracts prior to submittal for approval by the Governor (5 GCA 22601), the Attorney General has traditionally had a limited role to play, generally, in the conduct of the procurement process. The traditional role of the AG has been to serve as legal counsel and provide legal services to the Policy Office and the GSA (5 GCA 5150), and even the Public Auditor in some circumstances (1 GCA 1909(d)), although a primary role as attorney for any Agency it represents. In this role, the AG has for decades issued memoranda, guidance and opinion to the government agencies as to the legality of various issues concerning procurement (5 GCA 30107), as well as representing the government in litigation and administrative proceedings regarding procurement. a. This role has recently been specifically expanded to require the AG to provide legal procurement advice to the entire Government of Guam in large dollar procurements, by new law, Public Law 30-72. The Legislative reasoning behind this law is that such involvement of the Office of the Attorney General in the procurement process would ensure proper and expeditious procurement of goods and services and would minimize protests of bid awards and allow for a more expeditious procurement process. This law amends 5 GCA 5150 to include the following: Whenever the Chief Procurement Officer, the Director of Public Works, or the head of any executive branch agency, autonomous agency, instrumentality or public corporation of the government of Guam conducts any solicitation or procurement which is estimated to result in an award of Five Hundred Thousand Dollars ($500,000) or more, the Attorney General shall act as legal advisor during all phases of the solicitation or procurement process. (1) In original bill form (Bill No. 30-220), PL 30-72 would have been limited to all bids (thereby exempting other forms of source selection) and required the Attorney General to participate in the process of awarding any contract (which would have subjected the AG to conflicts claims). In addition to raising the dollar limitation, these deficiencies were thankfully caught before final passage.
b.
c.
This change, however, swamped the AGs office with procurement reviews. In a Memorandum to the Speaker of the Legislature from the Vice Speaker, dated July 20, 2010, a request was made to recognize an emergency and waive public hearings on a bill (Bill
Page 48
No. 434-30) to amend the just-amended PL 30-72 and 5 GCA 5150 to relieve the bottleneck. This bill became PL 30-157. (1) The reasons expressed in the Memorandum to pass this bill by emergency waiver of public hearing suggested that the purpose of the bill was to allow the appointment of the autonomous agency legal counsel as Special Assistant Attorneys General (SAAGs). 5 GCA 5150 was then amended to allow the appointment of SAGs, but was not restricted to autonomous agency legal counsel. 5150 now allows the Attorney General to appoint SAAGs subject to any reasonable requirements or conditions determined by the Attorney General to act as legal advisor during all phases of the solicitation or procurement process. SAAGs are colloquially referred to as deputized AGs, but they are not actually Deputy AGs (see 5 GCA 30106 dealing with the appointment of Deputy Attorneys General). SAAGs are not DAGs. The author observes that 5150 as currently amended allows SAAGs to broadly serve as legal counsel and provide necessary legal services to the Policy Office and the General Services Agency; their duties are not limited to providing procurement review to the autonomous agencies, nor is their appointment limited to the legal counsel of autonomous agencies. This is, on its face, an expansion of the scope of legal responsibilities beyond that indicated in the lead up to the passage of the amendments to 5150. 5150 is an example of how procurement law can be concocted when done hurriedly, piecemeal or ad hoc; it can result in apparently unintended consequences.
(2)
(3)
2.
When the AG is meant to approve a contract, she must approve both form and substance for legality, and that may mean inquiring into the procedures that precede the making of the contract, that is, the procurement process that led to the award of contract. (5 GCA 5150.) a. The author is specifically aware of one instance (without implying it is the only instance) where the Attorney General concluded she could not approve a contract due to procurement process issues. The context for this contract was an IFB issued by GPSS, now Guam Dept. of Education (IFB 010-2009). (See, Information and Guidance (Confidential) letter from OAG to Superintendent, DOE, signed by Asst. AG John Weisenberger, dated August 24, 2009, Ref. DOE 090774.)
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(1)
Among the reason given was that questions from vendors and answers from the agency, and amendments to the IFB were not shared with all vendors; site visits were arranged on an individual basis so that information was not shared uniformly; and, is was unknown if and to what extent amendments were responding to particular vendor queries.
3.
Although 5 GCA 5121(c) places responsibility on the CPO to execute all procurement contracts for services and supplies, [i]f the Attorney General or the Governor wish to review any contracts, this Section will not prohibit it. (Official Comment to 5121.) The provisions of 5 GCA 5450, et seq., regarding pre- and post-award remedies, [do] not apply to, say, a review by the Attorney General, who determines, in the course of his normal review, that the proposed action would be in violation of law if it were to be made. The provisions do apply, however, after a solicitation or award has been actually made or, in the case of an award, in such a stage as to be beyond the general scope of negotiation or review. (Official Comment, 5450.) (See the discussion on pre- and post-award remedies in Article XIX.C.2, below.) a. In Kings LLC, dba Kings Restaurant v. Alicia G. Limitiaco [as Attorney General], Guam Superior Court, SP 168-09 (Decision and Order re: Motion for Summary Judgment), March 25, 2010 (but filestamped February 24, 2010), the Court determined that the Attorney General was unconditionally constrained by the post-award remedies available under 5 GCA 5452. This case arose in the context of the withholding of approval in the DOE IFB mentioned above. (1) The Court found that the Attorney General had concurred with the agencys determination, after a protest concerning the contracts award, that the award was necessary without further delay. The Court did not discuss whether this determination was made in the context of the remedies to be rendered under 5451 and 5452, or in the context of lifting the automatic stay under the provisions of 5 GCA 5425(g). The Court made no finding that the solicitation, notwithstanding the award, was in such a stage as to be beyond the general scope of negotiation or review, as contemplated by the Official Comment. It did not even discuss the matter. In the Courts defense, it may have been that this issue was not considered because it was not raised or briefed by the Attorney General. Nevertheless, it would
4.
(2)
(3)
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seem that a finding that an award has been made is, on its own, a necessary but insufficient reason to deny the Attorney General approval power. (4) The Court nevertheless concluded that, simply because the contract had been awarded, the Attorney General could not withhold approval unless the AG reversed her decision about the legality of the contract or reversed her finding that its form is some how incorrect.
G.
The role and authority of agencies in procurement activities (if any). The term agencies is used here in its broadest sense to include all entities within the Executive Branch of the Government of Guam which are in any way subject to the requirements of, or which exercise any procurement authority by virtue of, the Procurement Act. 1. As elaborated in the following discussion, agencies have only a limited authority when it comes to procurement matters. They may conduct their own procurement activities under certain circumstances (when specifically authorized by legislation or due delegation from the CPO or Director of DPW), but only in strict compliance with the Procurement Act, and the general Procurement Regulations found in Title 2 GARR Division 4; they do not have the authority to promulgate their own general procurement regulations. a. The assertion that the adoption of agency procurement regulations are beyond the powers of the agencies must address the Guam Supreme Court case, Guam Imaging Consultants, Inc., v. Guam Memorial Hospital Authority, Guam Supreme Court, 2004 Guam 15, which also proves very useful to illustrate the points made below in support of this assertion. (1) In Guam Imaging, the Court assumed, without critical argument or analysis (it was evidently an uncontested matter in the case), that the Guam Memorial Hospital Authority had duly adopted and efficacious procurement regulations (at 22). In the discussion below, matters will be identified which the author respectfully argues were too hastily assumed. Guam Imaging is sound law and precedent for the preemptive effect of the general procurement regulations, but the statements made in the decision about the efficacy of agency procurement regulations are unsupported by critical analysis.
(2)
2.
As mentioned above, the policy, intent and effect of the Procurement Act is
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to centralize all procurement within the Policy Office, the Chief Procurement Officer, and the Director Public Works. a. The first explicit purpose and policy in the Procurement Act is to simplify, clarify, and modernize the law governing procurement by this Territory. (5 GCA 5001(b)(1).) As the Official Comment to 5001 states, this Act will regularize and centralize procurement on Guam, and, in so doing, attempts to save money for the Territory and make procurement more certain and regular for the vendors.
3.
PL 16-124 stripped all GovGuam agencies of procurement authority. 5 GCA 5120, originally enacted as GC 6954.6 in PL 16-124, is ground zero for this centralization. As of the Acts effective date (PL 16-124 was enacted in 1982), all rights, powers, duties, and authority relating to the procurement of supplies, services and construction ... now vested in, or exercised by, any governmental body under the several statutes related thereto are hereby transferred to the Policy Office and the Chief Procurement Officer and the Director of Public Works, as provided in this Chapter. The official Comment to 5120 says [t]his Section brings all agencies of the government within the purview of this Chapter. a. This is a critical event. Upon enactment of PL 16-124 (on December 30, 1982), any then existing procurement authority any executive agency might have had was stripped from them and transferred to and reposed in the centralized procurement regime. As adopted in PL 16-124, the term governmental body as defined in what is now 5 GCA 5030(k), then GC 6952(k), was uncategorical, without exception. It applied equally to all branches of the government. Thus, all branches were stripped of whatever procurement authority they may have once had, and that authority was vested in the centralized procurement regime. This may have been infirm as applied to the all of the branches under the separation of powers doctrine under constitutional law and as applied by the Organic Act, but it was fully effective against the executive branch. (1) GC 6952(k) said, Governmental body means any department, commission, council, board, bureau, committee, institution, agency, government corporation, authority or other establishment, or official of the executive, legislative or judicial branches of Guam.
b.
c.
In the next legislature, the definition of governmental body began to be whittled down, first by excluding the Legislature and then the Judiciary and a few agencies, but there was no broad legislative grant of procurement authority back to any agency which had been stripped of procurement power by the 16th Legislature.
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(1)
PL 17-27(2) defined governmental body to mean any department, commission, council, board, bureau, committee, institution, agency, government corporation, authority or other establishment or official of the executive or judicial branches of Guam.
d.
Evidently the judiciary and others caught wind of this and wanted out of the definition also, because on the heels of PL 17-27(2) came PL 17-43, An act to ... exempt the judiciary of Guam from the procurement regulations .... PL 17-43(2) defined governmental body to mean any department, commission, council, board, bureau, committee, institution, agency, government corporation, authority or other establishment or official of the executive branch of the Government of Guam, except the Guam Community College, the University of Guam, the Department of Education, and the Guam Memorial Hospital Authority. This is the definition still currently in effect. (1) PL 17-43 became law on January 18, 1984. However, as before, only the definition was changed. The definition by itself is neither a grant nor a confiscation of procurement authority. The Procurement Act has not restored any authority taken away by PL 16-124. As a result of this change, GCC, UOG, DOE and GMHA were excluded from the definition of governmental body, but nothing in the Procurement Act granted or restored to them any legislative procurement authority taken away on December 30, 1982. If an agency is to have any procurement authority, it must derive, under the Procurement Act, from a delegation from the CPO or Director Public Works, or, if not the Procurement Act, from other legislation subsequent to PL 16124 which specifically preempts the procurement authority vested in the centralized procurement regime. (a) The author is of the view that general purpose necessary and proper type clauses do not override the very specific procurement powers transferred to the centralized procurement regime in PL 16-124.
e.
(2)
(3)
4.
5 GCA 5125 was adopted by PL 18-44, which became law on November 14, 1986. Section 5125 resolved any doubt as to the breadth of application of the Procurement Act to all of the executive branch, notwithstanding the
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definitional changes. a. 5125 says [every] governmental body which is in the purview of the Executive Branch, and including GCC, UOG, GPSS, GMHA and other specific agencies, shall be governed by the Procurement Act, as discussed in the following sections of this Article below. 5 GCA 5125 reiterates and implements the intent of the Legislature that all Executive Branch governmental bodies, including autonomous agencies ... [are] to be governed to the maximum extent practicable by Chapter 5 of Title 5 of the Guam Code Annotated (which is the Guam Procurement Act). 5125 specifically required all such entities to be governed by most of the operative Articles of the Procurement Act, and to be governed by the remainder of the Acts Articles except to the extent that any such entity may be exempted from the centralized procurement regime, and if so exempted, then the only change made was that the Director of each such entity shall be substituted wherever the reference is to the Public Policy Office, Chief Procurement Officer or Director of Public Works; which is to say, the Directors of the entities were obligated perform the duties specified in those remaining Articles rather than the Policy Office, CPO or Director Public Works. (1) Those remaining Articles include Article 4 (dealing with Specifications), 5 (procurement of construction, A&E and surveying services), 8 (supply management) and 9 (legal and contractual remedies).
b.
c.
d.
5125 reiterated the reach of the Procurement Acts authority over the Executive Branch, including the statement, [i]t is the intent of I Lehestaturan Guahan to require all Executive Branch governmental bodies, including autonomous agencies, and the other above-named bodies, to be governed to the maximum extent practicable by [the Procurement Act]. (1) This provision requires any governmental body, and each above-named body, to conduct their procurement activities pursuant to [the Procurement Act], except insofar as said Chapter establishes and effects a system of centralized procurement. The exception means the agencies can conduct their own procurement unless the legislation has placed authority over procurement activities in the centralized hands of the CPO or Director of Public Works or the Policy Office.
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5.
Agencies only have such procurement authority as may be specifically granted by legislation or delegation. The importance of 5120 and 5125 must not be overlooked or underestimated. If any agency, autonomous or otherwise, claims to have any rights, powers, duties or authority relating to procurement, it must look to any law otherwise provided, or any specific exemption in the Act, or to any approved delegation that occurred after the effective date of the Act, for the legal basis of that claim. Absent such basis, there can be no such right, power, duty or authority to act relative to any procurement activity. a. As the Official Comment to 5120 elaborates, [t]his Section brings all agencies of the government within the purview of this Chapter. Whether or not such powers may be delegated depends upon the specific provisions of this Chapter, but all agencies are covered by this one Chapter. Even in the limited circumstances where the Legislature has, within the Procurement Act (this one Chapter of Title 5), expressed or implied a direction to vest procurement authority in a particular agency, it has done so by way of authorizing a delegation of the authority from the CPO, and not by way of any legislated direct, separate authority nor exception to the centralized procurement regime. (See, 5 GCA 5116, 5117.)
b.
6.
Critically, 5 GCA 5102 and 5130(a), provisions contained in the centralized procurement regime of Article 2 of the Procurement Act, vest sole duty and authority to promulgate procurement regulations in the Policy Office, and deny the Policy Office any authority to delegate that power ( 5130(b)). 5 GCA 5131 requires all agencies to adopt the Policy Office regulations. a. 5102 says, the Policy Office shall have the authority and responsibility to promulgate regulations, consistent with this Chapter, governing the procurement, management, control and disposal of any and all supplies, services and construction to be procured by the Territory. Part D of Article 2 of the Procurement Act deals with Guam Procurement Regulations, and has two sections, 5130 and 5131: (1) 5130(a): Regulations shall be promulgated by the Policy Office .... 5130(b): The Policy Office shall not delegate its power to promulgate regulations. 5131: Each governmental body ... shall adopt the
b.
(2)
(3)
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procurement regulations promulgated pursuant to 5130(a).... c. There is no residual procurement power in the agencies because, as mentioned above, 5120 transferred all such power to the Policy Office, CPO and Director of Public Works as of the date of its enactment. The specific power to promulgate procurement regulations was exclusively transferred to the Policy Office. Some agencies seem to think that they can adopt procurement rules by giving notice and then lodging them with the Legislative Secretary, an action required to adopt rules and regulations under the Administrative Adjudication Act. These are ersatz procurement regulations, not given any more legal effect by the mere certification of the Legislative Secretary. The AAA does not grant authority to agencies to adopt rules or regulations; it merely provides a method for agencies with rule-making authority to adopt regulations. Unless they are first given express power to promulgate procurement rules, they have no authority to adopt them (and as described above, only the Policy Office has been given that authority). (1) 5 GCA 9300 introduces the Rule-Making Procedures under the Administrative Adjudication Act. It says, [i]t is the intent of the Legislature to establish a uniform method of making, adopting, promulgating, filing and publishing rules .... It is not intended to give to any agency any additional rule-making power or authority and no additional or new power or authority to make or adopt rules is given to any agency by this law.
d.
7.
Under the centralization scheme, all original procurement authority, except only the authority granted to the Policy Office, originates in the CPO or Director of Public Works and can only be conferred on an agency by a limited power of delegation of such authority from the CPO or Director, and in accordance with the Procurement Act or Regulations. a. The Guam Imaging decision by the Guam Supreme Court did not consider (at least did not discuss) 5 GCA 5120 when the Court noted that GMHAs enabling legislation (which it uncritically said authorized GMHA to adopt its own procurement regulations) was enacted in 1977 and GMHA subsequently adopted its regulations in 1989 (at 22). The author asserts that, in 1982, 5120 stripped GMHA of whatever authority it may have had to adopt procurement regulations under the 1977 enabling legislation, and the 1989 resolution was a null, ultra vires act.
8.
The CPO or the Director of Public Works has only a limited power to
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delegate authority to any government body or official, and can revoke any authority previously delegated. a. 5 GCA 5114 provides, [s]ubject to the regulations of the Policy Office, the Chief Procurement Officer or the Director of Public Works may delegate authority to designees or to any governmental body or official. The regulations of the Policy Office, 2 GAR 2106, requires that any delegation to the head of any department or independent agency of this territory ... shall be in writing and shall specify: (1) (2) (3) (4) c. the activity or function authorized; any limits or restrictions on the exercise of the delegated authority; whether the authority may be further delegated; and the duration of the delegation.
b.
The grant of a power to delegate, and a delegation of authority, does not imply any power or authority for the delegatee to further delegate. (1) The law strictly construes the scope and powers of agency and delegation (18 GCA 20501), and there is no hint in the law or regulation that such construction should be relaxed here. Indeed, the specificity of the regulations regarding delegation (2 GAR 2105 through 2108) fairly clearly indicates otherwise. And see, the Official Comment to 5 GCA 5120, discussed above: Whether or not such powers may be delegated depends upon the specific provisions of this Chapter. Note also, that the Dean vs. Office of Personnel Management US Merit Systems Protection Board decision, mentioned above, touched also on agency delegation, and said it would assume, only for purposes of argument in that particular case, and based entirely on a statute which on its face appeared to expressly allow further delegation, that a subsequent delegation (from a person or agency specifically allowed to delegate) might be possible. (At 22.)
(2)
(3)
d.
2 GAR 2105 makes it clear that the power of delegation is not to be exercised on whim or prejudice, but only after consideration of several factors: (1) Factors to consider in making the decision to delegate
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include: (a) the expertise of the potential delegate in terms of procurement knowledge and any specialized knowledge pertinent to the authority to be delegated; the past experience of the potential delegate in exercising similar authority; the degree of economy and efficiency to be achieved in meeting the territory's requirements if authority is delegated; the available resources of the Office of the Chief Procurement Officer to exercise the authority if it is not delegated; and the consistency of delegation under similar circumstances.
(b) (c)
(d)
(e)
e.
PL 30-79:2 further limits the delegation authority granted by 5 GCA 5114, by prohibiting such delegation to any individual who is not required to file a disclosure statement under the Guam Public Official Financial Disclosure Act, 4 GCA Chapter 13. Thus, any person who is not required to file that disclosure statement cannot exercise procurement authority, and to do so would be an ineffective act under general legal ultra vires principles. This provision would remove any doubt that the designees to whom the authority may be delegated must be a government employee and not, say, a contractor, because non-government persons are not required to file the disclosure statements. Furthermore, it is basic common sense and law that a person cannot delegate any power the person does not herself possess. The authority to promulgate procurement regulations is, as discussed above, solely granted to the Policy Office, not the CPO or Director of Public Works, and not even the Governor. Thus, whatever power of delegation the CPO may have, it does not include the power to promulgate procurement regulations. (5 GCA 5130(a) and(b).) The Guam Supreme Court in its Guam Imaging decision said [a]lthough the Chief Procurement Officer as the head of the Guam Services Agency is the central procurement officer responsible for all executive branch procurement, he is authorized to delegate such procurement responsibilities (at 22). This is too broad a statement to make in the context of the promulgation of agency regulations, and was unnecessary to make in that case because delegation of procurement rule-making power was not an issue.
f.
g.
9.
It is not the intent of this Primer to analyze the sources of procurement authority for the various agencies, but a cursory look at some of them may
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reveal a pattern of the extent of devolution of agency procurement authority, and suggest the means by which such analysis may be conducted. Apart from searching for the term procurement, also look to the express powers of an agency in its enabling legislation to determine if any agency has procurement authority. a. The obvious starting point is to look at the laws establishing an autonomous agency. They are compiled in GCA Title 12. Lore has it that the mere autonomous appellation means the agency can do whatever it wants however it wants. That is not a liberty granted by 5 CGA 5120 and 5125, however. For illustrative purposes, look to the Guam International Airport; its enabling act is in Chapter 1. (1) Search for the term procurement to quickly key in on any procurement authority it may be specifically granted. There is only one search result with reveals a broad authority to purchase property under its general powers (12 GCA 1105), but subject specifically to the Procurement Act, by an amendment enacted in PL 16-124. There is an apparent anomalous feature in its general powers, separately granting it certain authority to procure construction, which would suggest that the Procurement Act only applies to purchases of supplies and services but not construction; nevertheless, GIAA is bound to follow the Procurement Act regime (5 GCA 5125). Another such facially apparent anomaly is in its specific power to adopt such rules and regulations, pursuant to the Administrative Adjudication Act, as may be necessary for the exercise of powers and performance of the duties. (12 GCA 1105(l).) (a) A general power will not override a more specific limitation. Particular expressions qualify those which are general. (20 GCA 15126.) GIAAs grant of the general power does not override the specific provisions of the Procurement Act both because the enabling act does not specifically override the very specific authority granted solely to the Policy Office by the Procurement Act to make procurement regulation; the general power to adopt rules as may be necessary for the performance if its duties does not override the very specific centralization of procurement duties in the CPO and
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b.
(2)
(b)
Director Public Works under the intent and effect of the Procurement Act. Furthermore, the Procurement Act preempts both the Administrative Adjudication Act and the GIAA enabling act by reason of its subsequent enactment. (c) Thus, while this would appear to provide an arguable legal basis for concluding that the GIAA has been directly granted procurement authority by the legislature rather than delegation, the power is so broadly worded in its general scope yet limited by its specific power only to purchase supplies that it remains arguable. Indeed, the author would not be convinced.
c.
Similar analysis can be made of the GMHA enabling act (10 GCA 80101 et seq). That Act was originally adopted in PL 14-029, in 1977. Thus, whatever procurement authority was granted in that Act was transferred to the centralized procurement regime in the subsequent Procurement Act, at 5 GCA 5120. The GMHA enabling Act was entirely repealed and re-enacted by PL 30-190 in 2010, but the re-enactment did not make any changes to any provision involving procurement, nor did it grant any new procurement power. (1) The GMHA enabling Act has restrictive powers, as discussed in the Guam Imaging case (at 22). The language of that statute authorized GMHA only to [a]dopt such rules and regulations ... as may be necessary for the ... performance of its duties and administration of its operations. It does not use the broader term powers, but speaks only to internal duties and administration. This can be analogized to the limited powers of the CPO and Director of Public works to adopt operational procedures governing the internal functions of their procurement operations (5 GCA 5113(b)), and then limited by and in accordance with regulations promulgated by the Policy Office (5 GCA 5113(c)(1) and (2)). (a) The author notes that the Governors executive power over GMHA is organically granted (Bordallo v. Baldwin, 624 F.2d 932 (9th Cir. 1980), but believes such power does not extend to overriding the legislated Procurement Act. The Procurement Act prescribes how contracts to expend funds are to be made; it does not prescribe which contracts are to be made. As the Guam Supreme Court noted in In re
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Request of Governor Carl T.C. Gutierrez, 2002 Guam 1, 27, The Legislatures plenary power of appropriation includes the power to impose conditions upon the expenditure of appropriated funds. (2) More pertinently, as regards procurement specifically, its powers are carefully limited. (a) The Board may, in accordance with all relevant procurement laws, contract with a professional management firm.... (10 GCA 80105.1(f).) The Hospital shall have and exercise each and all of the following powers: (This section, 10 GCA 80109, is the main provision granting power and authority to GMHA.) i) upon written certification of the Administrator, that specified and specialized medical equipment and related supplies are needed immediately for the health and welfare of the patients of the Hospital in particular, and the people of Guam in general, the Guam Memorial Hospital Authority shall be exempt from the provisions of 5210 and 5211 of Title 5, Guam Code Annotated [which specify methods of source selection, but do not deal with other matters, such as purposes, unsolicited offers, specifications or types of contracts or protests], in the acquisition of the medical equipment and related supplies specified in such written certification of the Administrator; provided, that the Hospital shall use its best judgment and efforts to secure the best equipment and supplies at the lowest cost, utilizing businesses licensed to do business on Guam whenever possible. (10 GCA 80109(e).) Acquire in accordance with the Procurement Law (5 GCA Chapter 5) and hold and use any personal property or construct any projects necessary or convenient or useful for carrying on of any of its powers pursuant to the provisions of this
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(b)
ii)
Chapter. (10 GCA 80109(q).) a) This provision is silent on services, which is to say there is no grant of power to GMHA to acquire services, other than the professional management services mentioned above. Thus, procurement of services for GMHA is vested in GSA by virtue of 5 GCA 5120.
d.
For another exercise, consider the University of Guam. Its enabling legislation is found in GCA Title 17, Division 3. Searching its Charter in Chapter 16 for any reference to procurement turns up no matches, however, in Chapter 17 (The University of Guam Revenue Bond Act of 1966) turns up one mention of procurement but only in an incidental manner ( 17109). Thus, in this admittedly cursory exercise, it is not possible to conclude that UOG has been legislatively granted, let alone administratively delegated, any separate procurement authority. A similar exercise conducted for the Department of Education turns up similar results and doubts. The point of these exercises is that the Procurement Act has very emphatically vested procurement authority in centralized authorities. It cannot exist elsewhere without clear legislative authority or administrative delegation; it should not be implied by broad and general declarations of power. Any agency claiming any procurement authority must be able to cite to the basis of the authority. The first question anyone doubting such authority must be, what is your authority?
e.
f.
10.
5121 allows specific exceptions to that centralized regime in that it authorizes any governmental body to act as a purchasing agency and contract on its own behalf but only to acquire specified professional services (subsection (a)). It also allows agency heads to approve contracts when authorized to procure the services or supplies in question (subsection (b)). It also allows the Department of Revenue and Taxation and the Guam Retirement Authority to approve certain contracts (subsections (c) and (d)). a. 5122 and 5123 specify that certain supplies (from the Federal government or motor vehicles) must be purchased by GSA (which reinforces the centralized procurement in those instances).
11.
Finally, 5124 provides four specific exemptions from the centralized regime for certain specific types of purchases applicable to all agencies,
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subject to the Procurement Act and regulations promulgated by the Policy Office, and the approval of the governor. These exemptions are for purchases of such things as works of art, A&E and land surveying professional services, and investment or actuarial services. Under these exemptions, any government body may purchase these things even if they do not have a delegated general procurement authority; provided, of course, they follow all applicable law and regulations. 12. The author concludes, the adoption of unique procurement regulations by agencies exceeds their authority to do so, notwithstanding the long standing lore and practice to the contrary, and regardless whether they have the power to conduct their own procurement. If they do not have the authority to adopt procurement regulations, any procurement regulations they have purported to adopt are invalid. a. First, as noted above, it is only the Policy Office that is authorized to promulgate procurement regulations (5 GCA 5102 and 5130) and the Policy Office is not authorized to delegate that authority (5 GCA 5130(b)). Second, 5 GCA 5131 mandates the agencies to adopt the procurement regulations promulgated by the Policy Office. This is not authority to promulgate their own versions. They must only adopt the Policy Office regulations compiled at Title 2 GARR Division 4. (1) 5 GCA 5131 requires specified government agencies (practically all of the Executive Branch, as identified in 5 GCA 5125; see above) to adopt THE procurement regulations promulgated [by the Procurement Office] to the extent such agency is subject to such regulations.... (a) Having but one form of procurement regulations is consistent with the seminal policy and purpose of the Procurement Act to simplify the law to regularize and centralize procurement on Guam, and make procurement more certain and regular, all as mentioned in 5 GCA 5001(b)(1) and the Official Comment to that section. The Procurement Act requires that it be construed and applied to promote its underlying purposes and policies. (5 GCA 5001(a).) To find in 5131 any authority for agencies to adopt their own version of procurement regulations defies the plain meaning of the statute, derogates from purposes and policies of the Procurement Act and ignores the mandated rule of construction.
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b.
(b)
The general Guam procurement regulations preempt anything substantively inconsistent in any other agency regulations (5 GCA 5131; Guam Imaging Consultants, Inc., v. Guam Memorial Hospital Authority, Guam Supreme Court, 2004 Guam 15 at 22, 41). i) See discussion of In the Appeal of Z4 Corporation, OPA-PA-09-012, in Article XXIV below, where the Public Auditor cited 5131 as the legal basis for her statement that DOE is authorized to promulgate its own procurement regulations. The authors analysis is, obviously, in disagreement. The author was advised by a staff person at OPA, in support of the efficacy of DOEs procurement regulations, that DOEs regulations were submitted to and signed by the Legislative Secretary under the rulemaking provisions of the Administrative Administration Law, 5 GCA Chapter 9, Article 3. That law, however, only provides a method of implementing regulations; it is explicitly not a source of power to do so (5 GCA 9300). The purported regulations are a nullity since there is no power for DOE to promulgate them.
ii)
c.
5131 mandates the agencies to adopt the Policy Office regulations to the extent such agency is subject to such regulations according to the terms of 5125 of this Chapter. As discussed above, 5125 specifically makes every substantive Article of the Procurement Act, and therefore the regulations adopted in furtherance thereof, applicable to all of the executive branch agencies. This leaves little to no room for agencies to adopt their regulations. 5125, on the other hand, establishes a centralized authority over all agencies, except to the extent that any such governmental body ... may be exempted from the centralized procurement regime of Article 2.... This provision refers to the exemptions in the law, not to the exceptions, such as they are, from the procurement regulations mentioned above. Thus, apart from the matter of power to adopt, and the obligation to be bound by, the general procurement law regulations, this provision limits any procurement
d.
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authority an agency may have to such authority, if any, derived from the centralized procurement regime. (1) There are few such exemptions; indeed there are only four activities specifically identified as exemptions. Purchases of items of works of art, publications, A&E services and investment or actuary services are generally exempt from the requirement of direct, centralized CPO or DPW procurement, so such items may be purchased directly by any agency; nevertheless, the procuring agencies must procure any such supplies or services in accordance with general procurement law and regulation requirements. (5 GCA 5124.)
e.
Under 5 GCA Article 2 (the Centralized Procurement Regime), Part B, 5114, the Chief Procurement Officer or the Director of Public Works may delegate authority to ... any governmental body or official. Such delegation is subject to the regulations of the Policy Office. (1) It is fundamental law (and common sense) that a person can only delegate such authority as the person has. Moreover, when a person delegates authority, the authority delegated is subject to the same restrictions and requirements applicable to the person doing the delegation. Neither the CPO nor the Director of DPW have any authority to promulgate procurement regulations (5 GCA 5130(b)). At most, the only administrative rule-making authority the CPO and Director have is to adopt procedures governing the internal functions of their procurement operations. 5 GCA 5113(b).) Procedures are not regulations in the broad sense, and do not carry the authority of law as do regulations, nor can they supplant regulations or laws. 5 GCA 9107 defines a rule to mean a regulation intended to have the force of law or implement one, but not regulations relating solely to internal policy, internal agency organization or internal procedure which do not directly affect the rights of or procedures available to the public. Thus, whatever procurement authority the CPO or Director Public Works may delegate, it does not, and can not, include the authority to promulgate procurement regulations which affect the rights of or procedures available to the public.
(2)
(3)
(4)
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f.
Recall, finally, as discussed above, that any exercise of delegation authority by the CPO or Director Public Works is subject to the regulations of the Policy Office (5 GCA 5114): (1) 2 GAR 2105 specifies certain factors that must be considered before making any delegation; thus, delegation is not an arbitrary discretion. Any delegation must be written and specific as to its scope, duration and whether it may be further delegated. (2 GAR 2106.) Thus delegation does not imply any right to redelegate or substitute. Lastly, some authorities may not be delegated at all, principally having to do with procurement of construction but also including the authority to resolve protests of solicitations and awards and decide automatic stays as well as to determine suspensions and debarment (2 GAR 2107), as well as certain other matters ( 2108).
(2)
(3)
13.
Note, for purposes of general guidance regarding the regulation of centralized procurement, the following statement applicable to Federal government procurement: The FAR precludes agency acquisition regulations that unnecessarily repeat, paraphrase, or otherwise restate the FAR, limits agency acquisition regulations to those necessary to implement FAR policies and procedures within an agency, and provides for coordination, simplicity, and uniformity in the Federal acquisition process. (Source: U.S. General Services Agency, Portal, Regulatory Reference Overview; to see how this is imposed, see FAR Subpart 1.304(b).)
IV.
METHODS OF SOURCE SELECTION (Procurement Methods) A. Generally speaking, there are only six main means of allowed procurement methods, which the Procurement Act speaks of as methods of source selection (5 GCA 5210(a)): 1. 2. 3. 4. Competitive Sealed Bidding (2 GAR 3109(b); 3109(n)(1)) Multi-step Sealed Bidding (2 GAR 3109(r)) Small Purchases (2 GAR 3111) Sole Source (2 GAR 3112)
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5. 6. B.
Emergency (2 GAR 3113) Professional Services (5 GCA 5216 and 5121; 2 GAR 5108)
These methods are more thoroughly discussed in the following Articles. Of these, only the competitive sealed bid method can be used for all solicitations, in all circumstances, though it is not always ideal, which is why there are other approved methods. All other methods are restricted to particular conditions of use; any use of a method that does not comply with its particular conditions of use violates the procurement system and is grounds for protest. The exceptions to the sealed bid process are delineated by statute.... The exceptions ... are limited, and Guam law no longer provides for an alternative to sealed bidding except as provided above. (Fleet Services, Inc. v. Dept. of Administration, 2006 Guam 6, 14,15.) Other special circumstances: 1. 2. Unsolicited Offers (5 GCA 5219) Purchases from a nonprofit corporation employing sheltered or handicapped workers. (5 GCA 5217) Drugs to be purchased by DOA, DPHSS, GMHA and GPSS shall be purchased, whenever possible, directly from the manufacturer so as to ensure and maximize economy. (5 GCA 5270) Unless other wise [sic] authorized by law (5 GCA 5210(a)). a. Note, for instance, PL 29-114 which specifically authorized the issuance of an RFP for the financing and construction of a particular new high school, and specifying other terms and conditions some of which were also at variance with the general Procurement law and regulations, some of which are discussed herein. Under 5 GCA 5216, discussed in Article VIII below, the RFP method of source selection is, by its own terms, only applicable to the procurement of certain professional services. Here, the Legislature specifically made that method applicable to this particular solicitation. (1) In the Appeal of Guam Community Improvement Foundation, Inc., (vs DPW) OPA-PA-09-005, involved a protest of a bid brought under the RFP authorized by PL 29114. In rejecting the Appellants Request to Reconsider Disclosure of the procurement record before award, the Decision (at pp 6 et seq.), engaged in a tortuous deliberation whether there were sufficient incidents of requirements of professional A&E services to invoke the RFP disclosure rules.
C.
D.
3.
4.
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The author suggests all that analysis was unnecessary, and distracting, believing that the Legislation in PL 29-114 itself, under the otherwise authorized clause, expressly provided full authority and direction to follow the applicable RFP processes regardless whether any professional services were involved. b. Compare this to 5 GCA 5122, which the Attorney General opined implied authority for the CPO to undertake direct purchases from the Federal government Supply Schedules under the other wise authorized clause. The Public Auditor disagreed: In the Appeal of Town House Dept. Stores, Inc. dba Island Business Systems and Supplies [IBSS vs GSA], OPA-PA-08-012; see Article XIII.D below on Federal Supply Schedule purchases.
E.
In most countries covered by this report, procurement by open tendering is the default method of procurement and accounts for the largest share of the value of procured goods and services. But it is not the only method practiced. Most procurement frameworks also provide for other methods, such as restricted tendering, request for proposals, canvassing, reverse auction, and single-source procurement. However, some of these methods, employed to speed up procurement or achieve other advantages, entail specific risks of abuse and corruption. Restricted tendering and single-source procurement, for instance, can be improperly used to select a bribe-paying supplier or to avoid public knowledge and scrutiny. A common corruption scheme is to deliberately create conditions that allow the use of methods such as restricted or single-source procurement, for instance, through deliberate failure of open tendering. (Public Procurement Asia/Pacific, supra, Part 1.2.) Changes (including extensions, renewals, amendments, task orders) to contracts, awards and solicitation: when new solicitation required 1. Guam procurement history has included many instances where, once a contract has been let, it is thereafter renewed indefinitely. The fact that the Guam Election Commission has leased the same office space for over thirty years without ever putting it out to bid is just one example. This is absolutely improper practice. The Procurement Act applies to every expenditure of public funds (5 GCA 5004(b)) and all territorial contracts shall be awarded by one of the approved methods of source selection (5 GCA 5210(a)). a. Although there is a fine but clear legal distinction between renewing and extending a contract, the same rule would apply in either case. A renewal is technically a new contract and clearly within the language of 5210(a), and creating an extension of an existing contract after award, when that was not within the contemplation of the specifications of the original bid, violates the notion that awards
F.
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can only be made consistent with the solicitation criteria (see, e.g., 5 GCA 5211(g) and 5201(d) and (f), 2 GAR 3114(f)(2)). 2. A properly procured contract may contain a renewal option, but such a contract provision is subject to strict conditions, as discussed in Article XV.M below. a. The International City/County Management Association (ICMA) has published a text book entitled Service Contracting: A Local Government Guide, 1992. (Although it does cite to the ABA MPC in instances, it is more generic, dealing often in principles more broadly recognized.) As to contract renewals and extensions, it notes, pp. 63-64: (1) A contract extension differs from a contract renewal. An extension generally is unplanned and seldom forecast in the award or contract document; a renewal is a planned event that must be covered by a clause in the contract. ... If ... completing a construction project on or before a specific date and the work is not done on time, a contract extension may be granted. The term renewal refers to a planned additional period of contract performance after the expiration of the original period.... Failure to identify a specific renewal period in the original bid document may prevent the local government from being legally empowered to grant a renewal.... If no renewal provisions are included, any renewal occurring after the original contract term could be legally viewed as a new contract.... If it is classified as a new contract, rebidding is required.
3.
In L.P. Ganacias Enterprises, Inc., dba Radiocom vs. GIAA and Guam Cell Communications, CV 1787-00, (at page 17) the Judge said, [i]t is the opinion of this Court that to allow Defendant [GIAA] to automatically renew its contract with Guam Cell at the end of the one year period would clearly side step the purpose and the protections of the open bidding process for government contracts. Thus, to allow the Defendant to renew its contract with Guam Cell at the end of the contract term, for a price that is to be negotiated between them, circumvents the entire bidding process, and this is not proper.... Rather, GIAA will again have to open the bid ... and will once again have to go through the entire bidding process before awarding the contract .... Sometimes, contracts are indirectly renewed or expanded into new fields by so-called amendments, and more recently task orders. The author takes the view that any contract amendment which materially changes the scope, by addition, deletion or otherwise, of the originally solicited term, specifications, supplies, services or construction work should be analyzed
4.
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with much the same principle as declared in the L.P. Ganacias Enterprises, Inc., case, id. That is, the test should be or at least include the consideration whether the making of the amendment to purchase something not previously solicited (supply, service, construction) would clearly side step the purpose and the protections of the open bidding process for government contracts. a. If proposed amendments to the solicitation would be of such magnitude that a new solicitation is desirable, it is in the territorys best interest to cancel a solicitation in whole or part prior to bid opening. (2 GAR 3115(d)(1)(B)(iii); this section is interesting also from the standpoint that it is one of the few, if only, instances where best interest is particularly described.) See, also, the discussion on amending specifications in Article XIV, below. In the Appeal of The Chesapeake and Potomac Telephone Company of Maryland, MSBCA No. 1194 July 30, 1984, the MSBCA relied on the scope of the contract test to find that a contract modification required a new solicitation. The facts involved a change in a telecommunications services agreement that the State believed would significantly reduce its costs by changing the contract to allow purchasing equipment rather than leasing it. (1) The Board said, [t]he issue before us concerns whether a new contract is about to be entered into without formal advertising, or whether proposed modifications to an existing ... agreement would be outside the scope of that agreement. In the latter situation, the modifications would be tantamount to a sole source award under a new procurement. (Opinion, pp. 17-18.). The Board ruled, [t]he determination of whether a contract modification is within the scope of the original bargain is a legal issue. ... Accordingly, we are free to consider the issue de novo. ... Marylands Procurement Law was enacted, in part, to foster effective broad-based competition through support of the free enterprise system. ... Whether a modification falls within the scope of the original undertaking, in a public contract context, depends on whether the alteration to performance is within the scope of the competition which originally was conducted. [Citation omitted.] (Opinion, p. 23; see discussion of public vs. private contract law in Article I.F above.)
b.
(2)
c.
See authors comments on In the Appeal of JMI Medical Systems, Inc. (OPA-PA-07-011) in the appeals review, Article XXIV.A.10 below, to the effect the government cannot purchase something it
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has not solicited. d. See 2 GAR 6101(3)(a) relative to change order clauses in fixed price contracts: By a written order, at any time, and without notice to surety, the Chief Procurement Officer or the head of a Purchasing Agency may, subject to all appropriate adjustments, make changes within the general scope of this contract .... Note that the Legislature has, in PL 29-114, allowed amendments to be sole sourced, apparently without restriction, to the incumbent contractor under the particular lease or lease-back contemplated in that legislation (... in connection with any amendments to an existing Lease or Lease-Back, the Contractor with respect to such amendments shall be the Contractor with respect to the existing Lease or Lease-Back. 58A105.) The fact the Legislature went to the trouble of making such a careful and unusual statement supports the validity of the view that contract amendments would usually implicate a new solicitation.
e.
5.
Note that any prospective bidder would have standing to challenge what amounts to an award of a new contract without proper solicitation when a contract is improperly extended, renewed or amended, by first protesting the action to the agency. See discussion of bid protests, Article XVI below, and consider In the Appeal of Town House Department Stores, Inc., dba Island Business Systems and Supplies, OPA-PA-08-003, involving the protest of a prospective bidder for supplies which had not been properly solicited. Assessment of whether a change to a contract constitutes a change order, thus amending a contract within its scope, or a new contract, adding additional matter beyond the scope of the original solicitation, is basically a matter of general contract interpretation principles, as noted by The Chesapeake and Potomac Telephone Company MSBCA appeal, supra. a. The determination of the scope of a contract lies in determining what it is that the contract called for in the first place. Answering the question whether the contractor has promised to do or provide exactly what the Government has requested is an issue of bid responsiveness. (In the Appeal of J&G Construction, OPA-PA07-005, p. 6; see discussion of responsiveness in Article VI.I below.) Thus, any determination of whether something is within the scope of a contract involves a similar evaluation as that of responsiveness; that is, the determination of the scope of the contract should at least consider the materiality of any changes to what the Government requested in the solicitation. (Again, refer to the discussion of bid responsiveness, and more particularly materiality, in competitive
6.
b.
c.
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sealed bidding below.) (1) In this regard, note In the Appeal of O&M Energy, S.A., OPAPA-08-004, ibid, wherein the Public Auditor indicated that an analysis of materiality may properly require a consideration of significant differences in prices.
7.
Price changes: a. Note that where a contract price adjustment involves a change of magnitude in price greater than $100,000, certain cost and price data must be submitted by the contractor to support the change. (See, 2 GAR 3118(b)(1)(B).) There is authority for the government to enter into a fixed price contract with price adjustments. (2 GAR 3119(d)(3).) This contemplates a variation in contract price under special conditions defined in the contract, other than customary provisions authorizing price adjustments due to modifications to the work. The formula or other basis by which the adjustment in contract price can be made shall be specified in the solicitation and the resulting contract. (Id.) This is only one of several types of contracts that may be made which anticipate price adjustments that can be expected to be encountered within the scope of the originally let contract. (See, 2 GAR 3119.) Any price adjustment allowed under a government contract has to comply with the provisions of 2 GAR 6106(6) as well as the requirements of any contract clause which specifically contemplates a price adjustment, such as the clauses dealing with stop work and change orders. (See discussion of allowable contract types and clauses in Article XV.B, below.) Some contractors have asserted to the author that at least one agency of GovGuam has implemented a hard-and-fast rule that any price adjustment that exceeds 15% of the original line item price bid must result in a new solicitation for that item, and does not qualify as a normal change order. (1) It was solemnly asserted to the author that this is a Guam procurement regulation. The author has not been able to ascertain any such regulation within the general Guam procurement regulations, although it may be a policy of a particular agency. The author understands the legal basis for such a rule, in that a significant price change may reflect a bidders
b.
c.
d.
(2)
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misunderstanding of the solicitation specifications in the first instance, or some other outside the scope deviation. And the author appreciates having a bright line reality check to assure that unauthorized changes are not occurring. But the author believes that any arbitrary limit to price adjustments may work an injustice on a contractor and an unnecessary impediment to government contract administration when the adjustment can reasonably and fairly be of the type of customary provisions authorizing price adjustments due to modification to the work as alluded to in 2 GAR 3119(d)(3), mentioned above. 8. Changes in quantity: a. A change in the quantity of the fixed quantity specified in the contract is regulated by the contract clause specified in 2 GAR 6106(a)(5)(a). It is very precise: "The following clause is authorized for use in definite quantity supply or service contracts: "VARIATION IN QUANTITY "Upon the agreement of the parties, the quantity of supplies or services or both specified in this contract may be increased by a maximum of ten percent (I0%) provided: (i) the unit prices will remain the same (except for any price adjustments otherwise applicable); and (ii) the Procurement Officer makes a written determination that such an increase will either be more economical than awarding another contract or that it would not be practical to award another contract." b. Note that this clause specifies a limit of a 10% change in quantity, but the time applicable to the change is unlimited. Typical clauses seen in many GovGuam General Terms and Conditions are opposite: they purport to allow an unlimited change in quantity but only for the limited time during the first 30 days of a contract. However laudable that may be from a policy perspective, it is not authorized by the regulations and is therefore a nullity, as beyond the power of the government agency to impose it. (See discussion of allowable contract types and clauses in Article XV.B, below.)
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9.
The authoritative professors Cibinic and Nash from The George Washington University, Government Contracts Program, discuss the issues of contract changes and adjustments in the following manner (Formation of Government Contracts, Third Edition, John Cibinic, Jr., and Ralph C. Nash, Jr., CCH/ Wolters Kluwer, p302 et seq., cited hereafter as Cibinic and Nash): a. Merely because work is added to an existing contract by modification or change order does not justify the use of other than competitive procedures if the work is in reality a new procurement action... Change orders issued under the various Changes clauses may be made on a sole source basis if they are within the general scope of the contract. [T]he Comptroller will review an allegation that the Government action should have been the subject of a new procurement.... A scope of the competition test is employed to determine whether work has been improperly added to a contract. See American Air Filter Co., 27 Comp. Gen. 567(B-188408), 78-1 CPD 443, stating at 573: The impact of any modification is in our view to be determined by examining whether the alteration is within the scope of the competition which was initially conducted. Ordinarily, a modification was within the scope of the procurement provided that it is of a nature which potential offerors would have reasonably anticipated under the changes clause. To determine what potential offerors would have reasonably expected, consideration should be given, in our view, to the procurement format used, the history of the present and related past procurements, and the nature of the supplies or services sought. A variety of factors may be pertinent, including: whether the requirement was appropriate initially for an advertised or negotiated procurement; whether a standard off-the-shelf or similar item is sought; or whether, e.g., the contact is one for research and development, suggesting that broad changes might be expected because the Governments requirements are at best only indefinite. c. A slightly different test was used in Cray Research v. Department of the Navy, 556 F.Supp. 201 (D.D.C. 1982), where the court stated at 203: The cardinal change doctrine prevents government agencies from circumventing the competitive process by adopting drastic modifications beyond the original scope of a contract. The basic standard is whether the modified
b.
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contract calls for essentially the same performance as that required by the contract when originally awarded so that the modification does not materially change the field of competition. (Cibinic and Nash, p 304.) (1) See, too, Webcraft Packaging, Division of Beatrice Foods Co., Comp. Gen. Dec. B-194087, Aug. 17, 1979, 79-2 CPD 120, discussed in the Appeal of The Chesapeake and Potomac Telephone Company MSBCA case, supra, where specifications were relaxed during the procurement process to all those offerors who had originally bid to obtain more easily obtainable products. Had the original procurement contained those relaxed specifications, the field of competition would have been significantly wider, and the competition more broad-based. That case was decided on the field of competition test. The change of the field of competition test might be used to analyze, for instance, dropping a major requirement in a bid during a solicitation, such as dropping a financing component from a finance, design, build and maintain solicitation. While the bidders or offerors in such a solicitation may not, as amongst themselves, be prejudiced, certainly the field of competition may have been significantly altered by such a change.
(2)
d.
Contract extensions, exercise of contract options, and lease renewals can also constitute de facto sole source procurements... The Comptroller General has stated that competition should be sought whenever it appears likely that the Governments position can be improved whether in terms of cost or performance.... [In one case the] Comptroller General found that the extensions became necessary only because the agency failed to timely solicit a followon contract, and the extensions were therefore not justified... [In another case, the] Comptroller General found no justification for the Navys contention that it would have been impracticable to obtain competitive proposals. The Navys primary reason for failing to procure competitively was a desire to ensure that the incumbent contractor performed the work. (Cibinic and Nash, p 305.)
10.
Changes by way of deletions of, as well as additions to, bid requirements made during a solicitation or contract award or performance can materially change the scope of the original solicitation, in which case, consistent with the general principles stated above, the change should result in a new solicitation. a. For instance, prior to bid opening, the government should cancel a
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solicitation in whole or part if such action is in the territorys best interests for reasons including ... proposed amendments to the solicitation would be of such magnitude that a new solicitation is desirable. (2 GAR 3115(d)(1)(B)(iii).) b. The the form of the solicitation can also bear on the analysis. In an IFB, for instance, the award is intended to be made without any changes. Bids shall be unconditionally accepted without alteration or correction. (5 GCA 5211 (d).) (1) When a purchase order or contract is concluded to implement an award of an IFB, it should not bear much variation from the solicitation, especially if the variation might prejudice another actual or prospective bidder. Prejudice refers to non-negligible matters that affect price, quantity, quality, delivery or contractual obligations; 2 GAR 3109(m)(4)(B). The regulation implementing IFB procedures says it does not permit negotiations with any bidder except as authorized by the regulation which implements the provisions of 5 GCA 5211(g), which, in very limited circumstances, allows a minor price or scope of work adjustment for a construction contract.
(2)
c.
One Maryland State Board of Contract Appeals case found that the changes to a contract performance resulting from a change in the relevant law was so far beyond the scope of the original contract as to require a new solicitation. (1) In the Appeal of Ullmann & Wakefield, P.A., MSBCA Docket No. 2137, September 13, 1999, involved a contract given for statutory legal services for certain children. Subsequently, additional legal services were required by new law to be offered, and the original contract was amended to incorporate this new legislative mandate. The Board held that the changes were a cardinal change that were outside the scope of the original contract, requiring a new solicitation.
d.
Appeal of United Technologies Corp and Bell Helicopter, Textron, Inc., MSBCA Nos. 1407 and 1409, January 30, 1989, (referred to here as the United Technologies MSBCA appeal) was a case involving the solicitation of medi-vac helicopter services and a multimillion dollar contract. It included several protests, and various issues, by different offerors under an RFP. Pertinent here was the issue whether one offeror could characterize certain negotiations as
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an amendment of the RFP, allowing it to obtain effectively lower pricing by including certain warranty benefits. The Board held since not all offerors were given the same opportunity under the RFP, to allow such an amendment would be unfair and improper. (1) But, in dealing with a near tie amongst the two most preferred offerors, the concurring members of the Board made the express point that matters generally within the contemplation of the criteria required in the RFP may receive particular attention and importance to allow the government to look past the point scores and make a final decision between the two near equivalents, without running afoul of the reweighting arguments.
e.
In the ABAs Government Contract Law Deskbook, based on the Judge Advocate Generals School, US Army, and thus focused on Department of Defense federal contract law and regulations, having some guidance for Guam as far as its procurement principles go, it is asserted that changes to contracts have slightly different standards, depending on whether the issue arises in the context of a protest action (involving other bidders, actual or potential) or in the context of a contract dispute (involving only the contractor and the government) (at p. 252). (1) In a protest action, the test is whether the change so materially altered the contract that the field of competition for the contract as modified would be significantly different from that obtained for the original contract (scope of competition). In contract disputes, the term, within the general scope, has a broader meaning. Courts and boards focus on whether the contract, as modified, is for essentially the same work that the parties originally bargained for (scope of work).
(2)
f.
The author takes the view that when a bid has been let for the finance, design and construction of a project, for instance, and subsequently the solicitation or the award on which it is based is changed to drop the finance requirement or materially alter it, there has been a change of such magnitude beyond the scope of the original solicitation, which has materially changed the field of competition, so as to require a new solicitation. (1) This would especially be the case where the bid evaluation is based on the finance criteria because the mere presence of the finance requirement will materially affect the field of competition in the first place and more importantly because
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the bidders are supposed to all be evaluated based on the same criteria, equally applied. (2) It should make no difference that the solicitation contains the express right of the government to reject any or all bids in part (see discussion of all or none bids in Article VI.N on Competitive Sealed Bidding, below). That policy (see 5 GCA 5225) allows rejection of part of a bid when in the best interests of the territory. (a) First, as noted above, it may be in the best interest of the territory to make a new solicitation when changes are of a magnitude to do so. Second, competition is one of the prime goals of the territorys procurement law. Where a bid requirement which initially narrowed the field of competition is dropped, opening the potential field of competition wider is in the territorys best interest. Third, and more to the point, the right to reject a part of a bid is not the same thing as dropping a bid requirement. Rejecting part of a bid only affects the one bidder. Dropping the requirement altogether affects not only all bidders, but all potential bidders.
(b)
(c)
11.
The author is aware that many in government and the private industry feel personally affronted by having to abide by procurement rules, and spend more time trying to figure out ways around the procurement process than through it. There has been, on Guam of late, a tendency to contract out wide-ranging authority, to give the contractor free reign from the procurement strictures. Without debating the merits of that, the author would caution that any arrangement whose scope is so broad as to be uncertain fails the contract law test of certainty, in which case the entire arrangement falls, to the risk of government and contractor alike. So trying to avoid the scope of the contract test by ambiguity is a risky proposition. Transparency requires, first of all, clearly defined procurement parameterssuch as conditions of participation, eligibility of suppliers, timelines, requirements, technical specifications for the procured goods or services, criteria for the rejection of a bid or the disqualification of a supplier, criteria for the evaluation of offers, contract termsand transparent and fair evaluation of all proposals and selection of the winning tenderer. Opaque dimensions create opportunities for corruption-induced manipulation. Thus, all these objective criteria must be clearly defined and stated beforehand. Second, information about the procurement procedures
12.
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and their regulatory framework must be available to all potential suppliers in understandable terms. Third, transparency requires easy access by potential bidders to information explaining the procurement procedures, which must be comprehensive. Besides laws defining the minimum information in tender documents, standard tender and contract documents are used to ensure a high degree of transparency and consistency.... The use of comprehensive standard contract documents also helps avoid negotiations at the time the contract is awarded. Unlike negotiations that may be required in the implementation of the procurement contract, negotiations during the awarding of the contract can be avoided. Such negotiations provide opportunities to offer or extort kickbacks or bribes. (Public Procurement Asia/Pacific, supra, Part 1.2.)
V.
BID BONDING A. Actually, bond is the common word used, but security is more technically apt and specified in the law (see, 5 GCA 5212). Security includes a bond, but also can include other forms of security such as cash or other form satisfactory to GovGuam: a cashiers check or standby letter of credit might be alternatives (see, 2 GAR 3109(c)(4)(D). Bid security for competitive sealed bids for supplies or services: 1. Bid security for competitive sealed bids for supplies or services is required when the total price estimated to be bid exceeds $25,000, and may be required when under that amount, by a written determination (and justification) included in the IFB. (5 GCA 5212(a).) The amount of bid security is fifteen percent (15%) of the amount bid. (5 GCA 5212(b).) a. Note: The amount of bid security specified (15%) was made by amendment to the law in PL 27-127:2. This legislative change has not yet been reflected in regulation, which continues to purport to allow the agency head to determine the amount (2 GAR 3109(c)(3)(A). The legislative change overrides the inconsistent regulation. (See, Guam Imaging Consultants, supra.) The requirement to provide a bond in the amount of a percentage of the amount bid (as required by the law) can lead to substantial uncertainty, as illustrated in In the Appeal of Fleet Services, Inc., OPA-PA-10-001. (1) That case involved an IFB for an indefinite quantity. This
B.
2.
b.
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necessarily involved bidding unit or per-occurrence prices. No estimate of minimum quantity was provided in the IFB, which particularly specified, according to the standard bid forms, the goods must only be supplied on an as needed basis. Appellants low bid was rejected on the basis it did not provide a bid bond. The Appellant argued, among other issues, that since there was no specified minimum for the product solicited, there was no assurance of any purchase, so no bond was required because the amount bid could not be ascertained But, the Appellant continued, even if a onetime minimum purchase was assumed, it would certainly place the amount of the bid under the $25,000 threshold for requiring a bid bond. It was suggested that it was improper to look to past purchases of the agency to estimate total requirements when the IFB itself provided no such instruction or information. The author finds himself sympathetic to Appellants arguments. (2) It appears the parties reached some kind of settlement since the notice of appeal was withdrawn and the matter was dismissed without prejudice.
3.
Release of bid security. The law here is probably broader than intended. As written, the bid security required under any applicable [IFB] shall not be released upon award of the bid, but instead shall continue in full force and effect until delivery of the supplies or services.... (5 GCA 5212(c).) This does not by its terms limit the application of the continued effectiveness to the successful bid and literally applies to the security of all bids, including rejected or high bids. The apparent intent, however, is to have only the successful bid security convert to and replace the need for a separate performance security; all others should be released upon withdrawal or rejection of the bid. (See, 5 GCA 5212(f).) Failure to provide required bid security may cause the bid to be rejected as non-responsive; see Article VI.J on materiality and responsiveness below. a. In Gaeta v. Ridley School District, 567 Pa. 500 (2002), the Pennsylvania Supreme Court refused to strictly apply the bid bond requirement, and allowed a minor deviation. The IFB required a bid surety rating at least A-; the bidder provided a bid bond from a B rated surety. The bidder upgraded the bond when the District notified it of the defect. The lower court held the bid bond rendered the bid non-responsive; the Supreme Court reversed. It said: (1) [C]ourts have not eliminated the discretionary aspect of executive decision making when the government is confronted with a non-compliant bid that it might choose to
4.
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consider to achieve effective utilization of the public fisc. ... [T]he following two considerations are widely accepted as central in determining whether a non-compliant bid for public work may be accepted or cured: first, whether the effect of a waiver would be to deprive the municipality of its assurance that the contract will be entered into, performed and guaranteed according to its specified requirements, and second, whether it is of such a nature that its waiver would adversely affect competitive bidding by placing a bidder in a position of advantage over other bidders or by otherwise undermining the necessary standard of competition (2) [W]e must consider whether the District's quality [rating] condition was material in the sense that the effect of a waiver would deprive the District of an adequate assurance, and whether a waiver would have advantaged IBE vis--vis competitors. In further assessing materiality, we move to consideration of the specific character of IBE's non-compliance. In this regard, we credit the common pleas court's observation that a bid bond, unlike a performance bond, serves the limited purpose of ensuring that the bidder will sign the contract if awarded. See generally A.J. Colella, Inc. v. County of Allegheny, 391 Pa. 103, 108-09, 137 A.2d 265, 268 (1958); 10 McQUILLIN, MUNICIPAL CORPORATIONS 29.66. The restricted purpose, duration, and scope of liability associated with bid security favors the affordance of a degree of latitude to the governmental entity in terms of the demand for absolute responsiveness. Accord 10 McQUILLIN, MUNICIPAL CORPORATIONS 29.66 (observing that "[u]sually, ... substantial compliance with the requirements concerning the security of bids is deemed sufficient"). [Footnote 12 omitted] While documents supplied by Gaeta outside the record appear to correctly reflect the definitional distinction between A.M. Best's "A" and "B" rating categories, nothing presented contextualizes this difference in terms of its effect upon the necessary assurance to the District given the bid bond's limited purpose, scope, and duration. We find the circumstances distinguishable from those involving price discrepancies, failure to bid on all necessary terms, the omission of cost or performance items, and defects related to a performance bond, concerning which liability is generally of far greater magnitude. See generally 10 McQUILLIN, MUNICIPAL CORPORATIONS 29.65. Additionally, we attribute minimal significance to the District's election to
(3)
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require a cure, since this merely represents the exercise of an available option with respect to non-material irregularities. C. Bid security for competitive sealed bids for construction contracts: 1. 5 GCA 5303(a) demands essentially the same bid security requirements for competitive sealed bids for construction contracts as is noted for supplies and services, above (i.e., required for bids expected to exceed $25,000 and discretionary for bids below that amount), except that there is no requirement for making a determination and justification for under $25,000 bid security to be made part of the IFB. Other provisions for bid security for construction contracts also parallel those for supplies or services, including the amount of the security and the possibility of rejection for noncompliance, the main significant difference being there is no provision intended to extend the bid security into the performance period, as there is with the supplies or services provision. As with supplies and services, failure to provide required bid security may cause the bid to be rejected as non-responsive, but the situations in which such failure may be considered to be non-substantial are more limited: see 2 GAR 5103(d).
2.
3.
D.
There does not appear to be any requirement for security for any bid or offer under any of the other methods of source selection for construction projects (besides competitive sealed bid), nor any prohibition against any such security, if required in any such solicitation.
VI.
COMPETITIVE SEALED BIDDING (5 GCA 5211; 2 GAR 3109) A. The default method. Preferred to all others. Contracts shall be awarded by competitive sealed bidding except as otherwise provided in 5210(a).... (5 GCA 5211.) The form is always by Invitation for Bids (IFB), which should contain the following (2 GAR 3109(c)(2)): 1. Instructions and information to bidders concerning the formalities of when, where, how to bid; the form of offer requisites. Its meant to be a checklist of all the things a prospective bidder needs to know to submit a bid, and instructions on how the bids will be physically dealt with. A purchase description of the supply or service that the Government wants; that is, what it wants, when it wants it, how it will evaluate the product offers, and any inspection or acceptance requirements.
B.
2.
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a.
Purchase description means the words used in a solicitation to describe the supplies, services or construction to be purchased.... (5 GCA 5201(b)(d).) Unless the context requires otherwise, the terms specification and purchase description are used interchangeably throughout these Regulations. (2 GAR 4101(a)(4).)
3.
The terms and conditions of the contract to be awarded, including such incidental matters as warranties and bonding. This is intended to fill in the ultimate essential legal requirements of the contract, otherwise the bid is nothing more than an unacceptable agreement to agree. Other formalities of the bid must also be met, such as signatures, declarations of ownership/major stockholders, certifications of noncollusion, bid bonding and the like as specifically provided by law or regulation. Remember that by signing a bid, you are making a legally enforceable offer to contract, so all essential legal requirements of offer and acceptance are met when the government awards the contract by accepting the bid.
4.
5.
C.
Distribution, notice and bidding time: 1. The law requires simply adequate public notice of IFBs. Newspaper publication is only required if the procurement exceeds $25,000, and then only requires seven (7) days notice before final submissions. (2 GAR 3109(f)(2).) In all cases, the solicitation is meant to be initiated, not by publication, but by distribution by mail or other means furnished to a sufficient number of bidders for the purpose of securing competition. (2 GAR 3109(f)(1).) Thus, GovGuam is meant to affirmatively seek out competition, not passively see what pops up, especially when it is recognized that newspaper ads often appear buried in the paper and unread by potential vendors. In contrast to the minimum publication time, and lore about when to start measuring the bidding time, the minimum bidding time is fifteen (15) days from the date of distribution to the time and date set for receipt of bids. (2 GAR 3109(d).) a. Although there is a minimum 15 day bidding time, [i]n each case bidding time will be set to provide bidders a reasonable time to prepare their bids. (Id.) Further, a shorter time [may be provided if] deemed necessary for a particular procurement as determined in writing by the procurement officer. (Id.)
2.
b.
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D.
Withdrawal, cancellation and rejection of all bids (5 GCA 5225). 1. A bidder can modify or withdraw a bid by written notice prior to the time set for bid opening. (2 GAR 3109(j) and (k).) Solicitations should only be issued when there is a valid procurement need unless the solicitation states that it is for informational purposes only. (2 GAR 3115(b).) The Government can cancel a solicitation only prior to opening if there is no longer a need, nor funds, or proposed amendments to the solicitation would be of such magnitude that a new solicitation is desirable. ( GAR 3115(d)(1)(B).) a. Preparing and distributing a solicitation requires the expenditure of government time and funds. Businesses likewise incur expense in examining and responding to solicitations. Therefore, although issuance of a solicitation does not compel award of a contract, a solicitation is to be cancelled only when there are cogent and compelling reasons to believe that the cancellation of the solicitation is in the territory's best interest. (2 GAR 3115(b); in accord, Commentary to MPC 3-301.) Cogent and compelling reasons for cancellation need not be given to disappointed bidders, but such reasons must exist; even so, only a brief explanation of the reason for cancellation need be given. (J&B Modern Tech v. GIAA, Guam Superior Court, CV 0732-06, p 6.) (1) In that Civil case, the plaintiff tried, unsuccessfully, to enjoin an agency from cancelling a bid after bid opening based on the sparseness of the information given in the notice of cancellation, and the remedy sought and posture of the case made the argument an uphill battle from the start. The author agrees with the result in that case (denial of injunctive and mandamus relief), based more on the procedural and technical requirements of the injunctive relief sought and the posture of the case. The Court noted that even if the substantive issues might be overcome, the plaintiff failed to make the requisite showing that plaintiff would likely have been awarded the contract anyway. (At p. 7.) Thus, the Decision was rooted in the technical and procedural issues, arguably rendering the comments on the substantive issue dicta. However, on the substantive issue of the need for an
2.
3.
b.
(2)
(3)
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explanation of the reasons to cancel a bid, the author would point out that 2 GAR 3115(d)(1)(D)(ii) expressly requires that the notice of cancellation shall briefly explain the reason for the cancellation. This is not an unduly burdensome requirement since [t]he reasons therefor shall be made part of the contract file. (5 GCA 5225.) (4) The Decision held simply identifying the legal justification suffices for the explanation requirements of the law and regulation. All the notice did there was parrot the particular justification of territorial best interest allowed by the regulation: ambiguous or otherwise inadequate specifications were part of the solicitation (2 GAR 3115(d)(2)(a)(ii)). The author would suggest that such a bald conclusory statement falls far short of the requirement to briefly explain, even if a full dissertation of the reasons (which should be part of the contract file) is not required. The author further points out this Civil case was decided before procurement appeal jurisdiction was conferred on the Public Auditor. A more recent decision of the Public Auditor in In the Appeal of Pacific Security Alarm, Inc., OPA-PA-07009, discussed in Article XXIV below, makes the point that, technically, a solicitation cannot be cancelled after bid opening. (a) Indeed, a close examination of the Courts decision evidences a failure to closely discriminate between reasons allowed for cancelling a bid and reasons allowed for rejecting all bids. i) The Courts Findings explicitly said, GIAAs Executive Manager determined, in writing, that the Specifications in the IFB were inadequate ... The notice of cancellation itself only referred to inadequate specifications. Inadequate specification is expressly a reason allowed for rejecting all bids (2 GAR 3115(d)(2)(a)(ii)) , but is not one of the reasons mentioned for allowing a solicitation to be cancelled in 2 GAR 3115(d)(1)(b).
(5)
ii)
c.
In the Petition of IBSS to Compel Decision, OPA-PA-09-011, Petitioner made the argument that it is improper to cancel a bid once a Protest has been filed, before a Decision on the Protest is
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rendered, based both on the substantive reason given for the cancellation as well as on the automatic stay, which is discussed below. (See, Memorandum in Support of Petition to Compel ...) The argument was undecided when the Petition was withdrawn and dismissed. 4. After bid opening and prior to award, the solicitation cannot be cancelled but all bids may be "rejected" in whole or part (2 GAR 3115(d)(2)(A) IF in the Territorys best interests, including: (1) (2) there is no longer a need prices exceed available funds and it would not be appropriate to adjust quantities to come within available funds (a) Contrast this with the right, but not the obligation, to cancel a solicitation if funds are no longer reasonably expected for the solicitation. Once bids are opened, funding is no longer reason to reject all bids; the focus here is only on prices and whether they are reasonable. See discussion of certification for funding, in Article XVIII.E.6.d, below.
(3) (4)
the specifications were ambiguous or inadequate the solicitation did not provide for consideration of all factors of significance to the territory appearance of collusive bids all otherwise acceptable bids or proposals received are at clearly unreasonable prices
(5) (6)
b.
Note that the determination of best interest is not one of those determinations made subject to the deferential standard of review by 5 GCA 5245, thus should attract some critical examination on review. See Article XXIII.B.4. Where GovGuam cancels a bid after bid open, (as opposed to rejecting all bids) it does so improperly and the cancellation is void. (In the Appeal of Pacific Security Alarm, Inc., OPA-PA-07009.) Compare rejection of all bids to a rejection of an unsuccessful bid or offer. In the latter case the rejected party may request that reasons be given for such a rejection. More on that below. While there is no
c.
d.
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particular grant of a right to request reasons for the rejection of all bids, note that the reasons for the rejection must be made part of the procurement file and available to the public. (2 GAR 3115(d)(3).) 5. Too Late, too bad: Any bid submission, modification or withdrawal received after the time set for opening of bids is late and will not be considered unless it was late due to the direct action or inaction of GovGuam personnel. (2 GAR 3109(k).) The word set would exclude any bid that comes in at the start of a delayed bid opening, but who would that prejudice ? (See discussion of bidder prejudice and responsiveness, in Article VI.J.2.a below.)
E.
Bid opening: The author recently reviewed an IFB that said simply, bids and modifications shall be opened publicly in the presence of one or more witnesses. The bidders were advised they would be later told the results. That is an incomplete description of what the regulations require and an improper procedure. 2 GAR 3109(l)(2) requires that the IFB specify the time, date and place of opening, to facilitate a truly public opening at which the bidders can be present. Prices and makes of models or catalogue numbers of the items offered, deliveries, and terms of payment shall be publically available at the time of bid opening regardless of any designation [of proprietary or other confidentiality] to the contrary (id.). 1. Many corruption schemes in the tendering and selection process are based on some form of abuse; transparent proceedings and easy access by bidders to essential information on the tenders are thus key deterrents to corruption in this phase. The opening of bids is a particularly crucial stage, as it constitutes a break in the process. Opening the offers in public or at least in the presence of all bidders or their proxies helps ensure that documents have not been altered or destroyed and allows manipulations to be detected at an early stage. To avoid leakage of information on the lowest bid to a preferred supplier and to exclude late bids, the bid opening ideally takes place immediately after the tender period. (Public Procurement Asia/Pacific, supra, Part 1.2.)
F.
Bid mistakes (discovered after opening, before award) generally are closely scrutinized. If the error was one of judgment rather than, for instance, a clerical mistake, the bidder is stuck with his original judgment. Minor bid mistakes which are not contrary to the interest of the Government or prejudicial to other bidders may be corrected. (2 GAR 3109(m).) 1. If the Procurement Officer opening the bids knows or should know there is a patent mistake, and the mistake is minor and non-prejudicial, the officer should ask the bidder to confirm or correct the mistake. a. In Appeal of Richard F. Kline, Inc., MSBCA No. 116, Feb 24, 1983, the Appeal Board ruled (at p. 4) that, although one rule for determining mistakes in bids was to give preference to written words
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over numerical figures, this rule cannot be applied with blinders. ... [T]he procurement officer must rely on his experience and common sense. ... [H]e may review the prices submitted by other bidders relative to the procurement at hand. 2. If the mistake is a minor informality of form or otherwise insignificant and non-prejudicial, the Procurement Officer shall waive such informalities or allow the bidder to correct them. Examples include failure to return required number of signed bids or failure to sign where required but other places were signed signifying intent to be bound. Mistakes that can be waived or corrected without prejudice to other bidders are those when the effect on price, quantity, quality, delivery, or contractual conditions is negligible. (2 GAR 3109(m)(4)(B))
3.
G.
Failure to seek clarification can be a trap. 1. In Appeal of Dominion Contractors, Inc. [#2], MSBCA No. 1041, Feb 9, 1984, the appellant argued that the bid was ambiguous (whether the contractor was to supply water meters or not). The Appeals Board ruled (at p. 10) that even if the contractors interpretation of an allegedly ambiguous provision might be conceivable, it was required to request a clarification prior to bidding. In so doing it relied on Federal law cases which was to the effect that contract ambiguities are not to be resolved against the government in procurement cases. There were other disputes in the Dominion Contractors case, supra, involving other alleged contract ambiguities, which the Appeals Board for the most part resolved against the appellant. As the concurring opinion stated, appellant had a duty to seek clarification, and [b]y ignoring the installation requirement and failing to inquire, Appellant assumed liability for its erroneous interpretations. (At p. 27.)
2.
H.
The award of the contract is to the lowest responsible bidder whose bid meets the requirements and criteria set forth in the IFB. (5 GCA 5211(g).) 1. The short hand, but not as precise, version of this general rule is that the award goes to the lowest responsible and responsive bidder. (2 GAR 3109(n)(1).) There are thus three criteria to separately and independently assess: a. A Responsive bid (which meets the requirements and criteria of the IFB). (1) The Invitation for Bids shall set forth the requirements and criteria which will be used to determine the lowest responsive bidder. (2 GAR 3109(n)(1).) Thus,
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responsiveness is determined in the bid envelope, which is to say at the bid opening, by the mandates of the bid requirements and criteria. (2) Responsiveness refers to whether the bid matches the supply, service or construction item that the government needs, as measured by the specifications for that supply, service or construction item as contained in the Invitation for Bids. Any bid which matches is responsive.
b.
A Responsible bidder (capable, trustworthy; not a guaranty of performance, only expectation of performance). (1) Bidder responsibility, in contrast to responsiveness, is determined separately and independently outside of the bid envelope. (2 GAR 3109(n)(2).) It is not determined in the bid envelope but by a separate determination process and independent standards of responsibility. (5 GCA 5230; 2 GAR 3116.) Responsibility refers to the governments preference to deal only with bidders or offerors who can reasonably be expected to deliver the supply, service or construction item in accordance with the terms of the awarded contract. Unless the government makes a specific determination that a bidder is nonresponsible (i.e., cannot be reasonably expected to deliver as promised), the bidder is considered responsible.
(2)
c.
Lowest price/cost (2 GAR 3109(n)(4)): (1) Nothing in this Section shall be deemed to permit contract award to a bidder submitting a higher quality item than that designated in the [IFB] if such bidder is not also the lowest bidder.... (2 GAR 3109(n)(5).) (a) Thus, low bids are not to be decided by awarding to the bidder with the perceived better product. Bid products are to be judged against the specifications, not other bids (2 GAR 3109(o)(1), 3109(n)(3)). Only objectively measurable criteria which are set forth in the [IFB] shall be applied in determining the lowest bidder. (2 GAR 3109(n)(4).)
(2)
Recall, as discussed in Article II.K above, the low price is more important than short delivery time, except in emergency. Except in emergency situations, lower price
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bids are generally preferable to shorten [sic: shorter] delivery or performance bids. (5 GCA 5010.) (3) To discourage collusion among bidders, tie low bids are generally not to be awarded by drawing lots or dividing the business, but only in such permissible manner that will discourage tie bids. In the case there is no such method, the award can be made by drawing lots, but not dividing the business. (2 GAR 3109(o)(2).) All bids should be rejected if the prices are unreasonable. (2 GAR 3115(d)(2)(A)(v).) Note that prices can be either unreasonably high or, as next discussed, unreasonably low. Abnormally low bids and proposals must be skeptically analyzed, as more fully discussed in Article VI.K.8, below. The problem of abnormally low bids is well canvassed in a paper entitled Prevention, Detection and Elimination of Abnormally Low Tenders in the European Construction Industry, online at http://gci-uicp.eu/Documents/Reports/DG3ALT-final.pdf .
(4)
(5)
d.
Of course, without prior market analysis which reveals what prices the government should reasonably expect, how would it know what is reasonable?. Market research at the solicitation development stage is essential for effective, planned procurement. See, Part 10.000 of the US governments FAR for guidelines on the need for and the means of obtaining effective market research.
2.
Award to next lowest bidder: a. This situation does not normally arise, because if the product of the lowest bidder is unacceptable, that bid is rejected as non-responsive, so going to the next bidder is actually going to the lowest responsive bidder left in the game. The same situation would apply to a bidder who is determined to be nonresponsible. The award must go to the lowest responsive bid by a responsible bidder, so it would be inaccurate to say the award is made to the next lowest bidder; it is in fact made to the lowest responsive and responsible bid and bidder after lower bids and bidders were properly rejected. It is also generally the rule that award of a contract concludes the solicitation process (See, 5 GCA 5211(g) and 2 GAR 3109(p) and (a).) Thus, if a contractor who is awarded the contract subsequently defaults, the needs of the Territory must be satisfied by going out to a new solicitation.
b.
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c.
But there is one situation where the award can actually made to the next lowest bidder after contractor default, without going back out to bid. 5 GCA 5212(d) says, [i]n the event that a successful bidder fails to complete delivery of supplies or services as required in the contract between such contractor and the government of Guam, the government may proceed to procure such supplies or services from the next lowest bidder who is able to deliver such supplies or services. On its face, this seems uncertain does it apply, for instance, to partial delivery? And, what about indefinite quantity deliveries? The original solicitation was for a certain amount of supply or service; can the government use that solicitation to procure less than the original bid? It would seem that this provision would only apply to a case of an award for a fixed quantity of goods at one delivery date.
3.
What if there is only one responsive bid or proposal? Lowest bid grammatically implies more than two bids are received. Lower would imply that only two responsive bids were received. When only one responsive bid is received, there is nothing to compare it against, no benchmark to know that it is low. a. The Guam Procurement Regulations (2 GAR 3102(c)) state that where "only one responsive bid is received" (which could include a situation where more than one bid was received but the other bids were non-responsive), an award may be made to the single bidder if a finding is made "that the price submitted is fair and reasonable"; but if it determined that the need "continues" notwithstanding a price that is not fair and reasonable, the procurement may be conducted as a sole source or emergency procurement "as appropriate". A similar situation is allowed for only one proposal received in response to a Request for Proposals. Thus, a sole bid is not given an award by default without the specific finding being made that the price is fair and reasonable. This is consistent with the policy of the Procurement Act that it be applied to provide increased economy ... and to maximize to the fullest extent practicable the purchasing value of public funds of the Territory. (5 GCA 51001(b)(5).) See, The dilemma of "only one bid received" at http://bloggeddowninprocurement.blogspot.com/2010/11/delimmaof-only-one-bid-received.html
b.
4.
The distinctions between responsive and responsible, and the practical ramifications of those distinctions, were considered and thoroughly discussed in the J&G Construction Appeal, OPA-PA-07-005; see the Decision, at pp. 5 et seq. As the Appellant there mentioned in its Notice of Appeal (page 6), [n]ot only are these terms substantively distinct, the
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determination of each of them is to be accorded very different standards and processes. a. Responsiveness and responsibility are too often confused and conflated into one nonsensical notion the author has termed Responsivebility. The Hawaii Intermediate Court of Appeals in Okada Trucking Co., LTD. v. Board of Water Supply, 40 P.3d 946, 97 Haw. 544 (Haw. App., 2001, at 40 P.3d, pp 958-959) quoted extensively from the US Claims Court (Bean Dredging Corp. v. United States, 22 Cl.Ct. 519 (1991)) to distinguish responsive from responsible: (1) Responsiveness addresses whether a bidder has promised to perform in the precise manner requested by the government. To be considered for an award a bid must comply in all material respects with the invitation for bids. A responsive bid is one that, if accepted by the government as submitted, will obligate the contractor to perform the exact thing called for in the solicitation. If there is material nonconformity in a bid, it must be rejected. Material nonconformity goes to the substance of the bid which affects the price, quality, quantity, or delivery of the article or service offered. Responsibility addresses the issue of the performance capability of a bidder, which can include inquiries into financial resources, experience, management, past performance, place of performance, and integrity. In contrast to responsiveness, a bidder may present evidence of responsibility after bid opening up until the time of award. In terms of identifying whether a particular requirement is related to responsiveness or responsibility, the distinction is whether the bidder will conform to the IFB, as opposed to how the bidder will accomplish conformance. Stated another way, the concept of responsibility specifically concerns the question of a bidder's performance capability, as opposed to its promise to perform the contract, which is a matter of responsiveness.
b.
(2)
(3)
(4)
(5)
5.
The determination of the lowest responsive bidder must focus on price considerations, not the qualification of the bidders. It is improper to evaluate a bid based on the ranking and selection of the most qualified
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company. (In the Appeal of JMI Medical Systems, Inc., OPA-PO-07-011, pp 10-11.) 6. Bids and offers must be evaluated fairly and effectively to make sure they comply with the criteria of the solicitation. In L.G. Ganacias, CV 1787-00, supra, the Judge stated (at page 23) that the person charged with evaluating the bid offerings should be an individual with some knowledge of the product which is the subject of the bid. There, the evaluator who reviewed the bids testified she did not examine samples submitted because she did not know much about them, which drew an admonishment from the Court. Note that the next lowest bidder may get the contract if the low bidder fails to perform, which reduces the necessity for re-bidding (assuming no changes to the solicitation). In the event that a successful bidder fails to complete delivery of supplies or services as required in the contract between the contractor and the government of Guam, the government of Guam may proceed to procure such supplies or services from the next lowest bidder who is able to deliver such supplies or services. (5 GCA 5212(d).) a. This raises a fairly esoteric question whether such next lowest bidder who is able to deliver must be fully responsible. As discussed below, bidder responsibility involves both ability and integrity; in this instance, on its face, only ability is required.
7.
I.
What is a Responsive Bid? a. Responsive Bidder means a person who has submitted a bid which conforms in all material respects to the Invitation for Bids. (5 GCA 5201(g).) (1) Bid responsiveness concerns whether a bidder has offered unequivocally in its bid documents to provide supplies in conformity with all material terms and conditions of a solicitation for sealed bids, and is determined as of the time of bid opening. (ABA Contract Deskbook, p. 65.) The Hawaii Supreme Court has said, a bid that does not conform in all material respects to the Bid Solicitation is nonresponsive. However, this begs the question of what constitutes conformance "in all material respects." Quoting in part a US Court of Claims case (Toyo Menka Kaisha, Ltd. v. United States, 220 Ct.Cl. 210, 597 F.2d 1371, 1376-77 (1979)), the Hawaii Court continued, Where a government contract is awarded under competitive bidding, "deviations [from advertised specifications] may be waived by the
(2)
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contracting officer provided they do not go to the substance of the bid or work an injustice to other bidders. A substantial deviation is defined as one which affects either the price, quantity, or quality of the article offered ." (Southern Foods Group, L.P. v. State, Dept. of Educ., 89 Hawai'i 443, 974 P.2d 1033, 1999; at 89 Hawai'i 456.) b. Acceptability evaluation. Any bidders offering (that is, product or service) which does not meet the acceptability requirements shall be rejected as nonresponsive. (2 GAR 3109(n)(3).) The IFB shall set forth any evaluation criteria to be used in determining product acceptability. (Id.) (1) Descriptive literature. An IFB may, but need not, require submission of descriptive literature (see, 2 GAR 3109(e)(3)(A)), such as brochures and the like, more fully describing the specifications of the thing solicited. (2 GAR 3109(n)(3).) ) (a) If a bidder provides descriptive literature when the IFB does not specifically ask for it, unsolicited bid samples or descriptive literature which are submitted at the bidders risk will not be examined or tested.... (2 GAR 3109(e)(3)(D).) Moreover, the regulation requires the government to state, in an IFB, that bid samples or descriptive literature should not be submitted unless expressly requested. (Id.) Since bids are only meant to be evaluated for acceptability based on the specifications of an IFB, it is improper to reject a bid on the basis that descriptive literature was not provided to prove product acceptability when the IFB does not require it. In typical GovGuam General Terms and Conditions, there is a clause which reads "[d]escriptive literature(s) as specified in the solicitation must be furnished as a part of the bid and must be received at the date and time set for opening Bids." This clause is routinely ticked, but often there is no separate requirement in the IFB to provide specified literature. The Public Auditor has determined that ticking the descriptive literature clause is inadequate to
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(b)
(c)
(d)
(e)
require specific literature to be submitted with a bid. (In the Appeal of JMI-Edison, OPA-PA-11-001.) i) She said, [t]he IFB did require the bidders to submit descriptive literature as specified in the IFB with their bids. [Bold emphasis in original; footnote referencing typical descriptive literature clause omitted.] Thus. this requirement is limited to descriptive literature specifically required by the IFB. (At p. 13.) She concluded, the Public Auditor finds that whether MEDPHARM's submission of its certificates of compliance with various standards and codes was responsive is moot because the IFB did not require the bidders to submit such documents with their bids.
ii)
(2)
The acceptability evaluation is not conducted for the purpose of determining whether one bidders item is superior to another, but only to determine that a bidders offering is acceptable as set forth in the IFB. (Id.) Thus, when bids are tied for lowest bid amount, the award is not given to the one offering the superior product if all tied bids meet the minimum specifications. (2 GAR 3109(o).) Recall that delivery or performance timing may not be considered a factor in responsiveness if there is a lower price bid or offer, where the lower price exceeds the relative thresholds of price and time specified in 5 GCA 5010, as discussed in Article II.K.2, above. It is improper to use responsibility-related factors or subfactors if the evaluation is merely to determine acceptability. (Nash, Cibinic and ONeal, p. 271.)
(3)
(4)
(5)
c.
A bid is nonconforming if it fails to comply exactly with the literal requirements of the IFB. However, not all nonconforming bids are nonresponsive. (In the Appeal of J&G Construction, supra.) (1) It is critical to determine, first, whether a nonconformity deals with the responsiveness of a bid or the responsibility of the bidder. Responsiveness deals with the question whether the contractor has promised to do or provide exactly what the Government has requested in the bid specifications and
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criteria. If the nonconformity deals, then, with matters of responsibility, there is no issue of responsiveness. As discussed below, matters of responsibility are determined separately. (2) Secondly, if the nonconformity is immaterial, as discussed below, it is nevertheless responsive; responsiveness only applies to material nonconformities.
d.
Questions of responsiveness are determined in the bid envelope, that is, only on the basis of information submitted with the bid and on the facts available at the time of bid opening. (Id.)
2.
As a general rule, and contrary to lore, matters that deal with bidder responsibility cannot be converted into matters of responsiveness merely by inserting a provision into the IFB requiring production in the bid envelope of information regarding issues of responsibility, and rejection of bids that do not comply. (In the Appeal of J&G Construction, supra.) a. Not everything mandated by the IFB can be considered to affect responsiveness. (Compare the J&G Construction Appeal, with the discussion of responsive bidder in In the Appeal of Guam Publications, Inc., OPA-PA-08-007 (at part III, D of the Decision, beginning p 13; and note that J&G Construction was decided subsequent to Guam Publications, and specifically declared that its distinctions between responsive and responsible were matters of first impression. Presumably, this issue in Guam Publications is overruled by J&G Construction.) Note, also, the Decision of the Public Auditor in In the Appeal of Pacific Data Systems, Inc., OPA-PA-10-005, to the effect that, while an agency cannot insert a provision in an IFB to convert a matter of responsibility into a matter of responsiveness, by law, the Legislature can require information be provided as a condition of bidding even though the substance of the information is more in the nature of matters concerning a determination of responsibility than responsiveness. A critical review of the Decision appears in Article XXIV below. See, In the Matter of D.J. Findley, Inc., Comp. Gen. B-215083, July 24, 1984. In that case, INS rejected the bid as nonresponsive after the protester's facilities failed a sanitation inspection that was mandated by the solicitation. INS had changed the solicitation to provide that the condition was one of responsiveness. The protester contended that the matter of whether it passed the inspection was one of responsibility rather than responsiveness.
b.
c.
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(1)
The Comptroller General held, It is not disputed that the IFB, as amended, described the sanitary examination as a matter of responsiveness,'and the contracting officer appears to believe that the matter must be so viewed because that is what the solicitation said. It is well-settled, however, that a contracting agency cannot change a matter of responsibility into one of responsiveness merely by the terms of the solicitation. GAO held, and the Comptroller General agreed, that, regardless of the wording of the solicitation, the matter was clearly one of bidder responsibility.
J.
Materiality only concerns Responsiveness: The subject of Bid Mistakes has been introduced above. Here it is again discussed to emphasize that materiality and immateriality are measures of bid responsiveness (material in all respects). Thus, immaterial mistakes, though non-conforming, will not render a bid nonresponsive. 1. Minor mistakes in a bid are not material so do not make a bid nonresponsive. (But a bid price and terms involves a calculated judgment on the part of the bidder, and mistakes of judgment are material and cannot be corrected or otherwise changed. (2 GAR 3109(m).)) Minor mistakes include insubstantial matters of form (minor informalities) and insignificant mistakes that do not prejudice other bidders. (2 GAR 3109(m)(4)(B).) a. Matters of bidder prejudice only include factors that affect price, quantity, quality, delivery, or contractual conditions. (Id.) Nonnegligible factors of price, quantity, quality, delivery or contractual conditions are material and prejudice other bidders. Matters reflecting on bidder qualifications are issues of responsibility and do not concern or prejudice other bidders because they do not involve issues of price, quantity, quality, delivery or contractual conditions. These concepts are often confused, particularly when the IFB contains specific requirements concerning the bidder's responsibility characteristics such as the requirement for submission of information relating to responsibility. (1) In the Frontier Systems U.S. Comptroller General Decision, discussed below, the Comptroller General accepted the contention that the solicitation requirement for three relevant questionnaires [relevant to bidder past performance] was not a material requirement since it did not affect the price, quantity, quality, or delivery of the services required. (At p 6.)
2.
b.
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c.
Recall again, that delivery time is not as important as price, and that, in effect, shorter delivery time may not be even be material if there is a lower price bid. (1) Delivery time may be considered as a factor in making an award to a responsive bidder only if his average delivery time bid is at least ten percent (10%) shorter than the average delivery time of a lower price responsive bidder and if the price offered by the bidder offering the faster delivery or performance does not exceed one hundred five percent (105%) of the lower price bidder. (5 GCA 5010; see Article II.K, above.)
d.
Minor mistakes are immaterial so can be corrected after bid opening, before award. The Procurement Officer shall waive or allow the bidder to correct minor mistakes. (2 GAR 3109(m)(4)(B).) A deviation that does not materially affect the price, delivery time, quality, or quantity of the item solicited is considered a minor waivable informality. [Footnote omitted.] Those four elements price, delivery time, quality, and quantity, sometimes referred to as the PDQQ rule are the essential elements of any invitation for bid. (FedGov Construction Contracts, p. 18.) The Hawaii Intermediate Court in the Okada Trucking case, supra, quoted with approval the US Claims Court case in Blount, Inc. v. United States, 22 Cl.Ct. 221 (1990): [A] bid which contains a material nonconformity must be rejected as nonresponsive. Material terms and conditions of a solicitation involve price, quality, quantity, and delivery. (Emphasis added.) Manifest mistakes are clearly evident on the face of the bid and shall be corrected to the intended correct bid and may not be withdrawn. Examples include typographical errors, errors in extending unit prices, transportation errors, and [obvious] arithmetical errors. Low bids can be withdrawn but not corrected if the mistake is obvious but the intended bid amount is not clearly evident. When a mistake is suspected, the Procurement Officer should request the bidder to confirm the bid. Examples include errors on the face of the bid or a bid unreasonably lower than the other bids submitted. The bidder can confirm, correct or withdraw the bid under the conditions noted above. Any kind of mistake can allow a bidder to withdraw or correct a bid
e.
f.
g.
h.
i.
j.
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prior to the time set for bid opening because bids are not firm until then. k. After award, mistakes cannot generally be corrected unless the Head of the purchasing agency determines it would be unconscionable not to allow the correction. Noncompliance with the requirements to provide bid security requires the bid to be rejected unless ... it is determined that the bid fails to comply in a non-substantial manner.... (5 GCA 5212(e).) (1) In Appeal of Madigan Construction Company, Inc., MSBCA No. 1350 October 26, 1987, the Board ruled that the Appellants bid bond was nonresponsive and incapable of being adjudged an immaterial clerical error when the name of the obligee (the government agency) was that of another entity and the effective duration of the bond was 60 days rather than the required 90 days.
l.
3.
Note that when there is an extraordinary difference in price between the accepted bid and a lower bid rejected as non-responsive, the materiality of the reasons given for rejecting the low bid are closely scrutinized, assessing such matters in terms of the dollars associated with the non-responsive items against the excessively higher bid as a whole, to arrive at, perhaps, a different conceptual meaning of material in all respects. That is, the question of what is material is, to a degree, a question of relativity, dependant upon the facts of a particular case. a. In her Decision in In the Appeal of O&M Energy, S.A., OPA-PA-08004, the Public Auditor found [t]he fact that TEMES bid was six million dollars over O&Ms bid indicates that GPA may not have done sufficient analysis as to the cost of the four items it deemed to be non-responsive.... (At p 3.) In support of her authority to cancel the bid in that case, the Public Auditor referred to her jurisdiction to promote the integrity of the procurement process and the purposes of [the Procurement Act], as well as other case law she cited as holding t]he purpose of statues, charters or ordinances requiring competitive bidding is to guard against favoritism, improvidence, extravagance, fraud and corruption, and to secure the best work or supplies at the lowest price practicable and they are enacted for the benefit of the property holders and taxpayers, and not for the benefit of enrichment of bidders, and should be construed and administered as to accomplish such purpose fairly and reasonably with sole reference to public interest. (Id.)
b.
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c.
The Public Auditor found, GPA did not engage in the required determination of materiality, adding, the issue is whether O&M was non-responsive, or whether the irregularities found in their bid submission might be determined to be waiverable [sic] irregularities. (Id., at p 5.)
K.
What is a Responsible bidder? 1. A Responsible Bidder 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. (5 GCA 5201(f).) a. Capability is determined as of the time of award. (2 GAR 3101(1).) Responsibility refers to a bidders apparent ability and capacity to perform, and it is determined any time prior to award ... (bidders failure to submit with its bid preaward information to determine the bidders ability to perform the work solicited does not render bid nonresponsive). (ABA Contract Deskbook, p. 65.) The author has the view that the determination of capability is more objectively determined that integrity, which is a more subjective judgment. A capable bidder is not necessarily responsible if the bidder lacks integrity, nor is a highly respected bidder responsible if incapable of providing the thing or service the government specifies in the IFB. Each factor, capability and integrity, are independently essential to a determination of responsibility. (1) See, In the Appeal of Latte Treatment Center, Inc., supra, where the Public Auditor held it was error to fail to conduct a separate inquiry into the offerors integrity.
b.
c.
d.
2.
Responsibility involves the question whether the contractor can or will perform as it has promised. (In the Appeal of J&G Construction, OPA-PA07-005.) a. The issue of distinguishing between a responsive bid and responsible bidder was a matter of first impression before the Guam Public Auditor. No prior OPA appeal had raised or argued the distinction, and many decisions were made on the lore that an IFB could, by mandate, allow an agency to determine issues of responsibility by the standard of materiality and in the bid envelope process used to determine whether the bid is responsive.
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3.
Responsibility determinations are made on the basis of all information that may be submitted or available up to the time of award. (J&G Construction, supra.) Thus, whereas responsiveness is determined by the material in the envelope at bid opening, responsibility is determined by information available or made available at any time up until an award is made. Contrary to lore, the IFB cannot alter this rule of law by requiring (mandating is a word bandied about) information concerning bidder responsibility to be submitted in the bid envelope. a. Hint: The law and authorities generally (not always) use the term evaluate or evaluation when discussing issues of responsiveness, but determine or determination when discussing issues of responsibility.
4.
Standards of Responsibility (2 GAR 3116(b)(2): Factors to be considered in determining whether the standard of responsibility has been met include whether a prospective contractor has: a. available the appropriate financial, material, equipment, facility, and personnel resources and expertise, or the ability to obtain them, necessary to indicate its capability to meet all contractual requirements; (1) These matters relate to the nuts and bolts of performance, and do not refer to the capability to actually render full performance on the date of award, but only when required to meet all contractual requirements. Most contracts have a time for performance element, and all that is required for a determination of responsibility is that the prospective contractor has the ability to obtain all such elements in time to perform the contract. In Hawaii, an MPC state, the Office of Administrative Hearings, Dept. of Commerce and Consumer Affairs, provides the procurement appeals function of the Guam OPA. In a case before that tribunal, it was decided that the determination by a procurement officer that the low bidder was responsible would not be over-ruled even though, at the time of award, the bidder did not have the necessary business licenses and permits, employees, equipment, and business office or other facilities to provide trash removal services for the Honolulu International Airport. The tribunal said it was sufficient that the bidder had shown, before award, the ability to obtain the resources to meet the full contract performance requirements. (In the Matter of Browning-Ferris Industries of Hawaii, Inc., PCH-2000-4.) That is, the measure of responsibility is being able to perform
(2)
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when required, not necessarily at bid award (if performance is to occur sometime later). It is not so much an issue of readiness to perform but ability to perform when required. b. c. d. a satisfactory record of performance; a satisfactory record of integrity; supplied all necessary information in connection with the inquiry concerning responsibility; and qualified legally to contract with the territory [that is, a business license]; (1) Compare Emission Technologies vs. Dick Pacific: (a) In the Appeal of Emission Technologies, Inc., OPAPA-07-002, involved an RFP and held that the bid of an offeror who does not have a license to conduct business on Guam at bid opening, especially where the RFP requires a business license, is nonresponsive. Arguably, the J&G Construction case overturns the holding in that decision even though it did not involve an IFB, since legal qualification to contract (as opposed to a specialty license to perform a service) is a matter of responsibility and may be rectified by obtaining the license after bid opening. Other MPC jurisdictions reach that result consistently. In any event, TRC Environmental Corporation, SP 160-07, supra, vacated the OPA Decision in Emission Technologies, and in doing so ruled that there is no need for the offeror in an RFP to have a business license until after the initial negotiations are completed (at page 7 et seq.). It is improper to use responsibility-related factors or subfactors if the evaluation is merely to determine acceptability of a proposal. (Nash, Cibinic and OBrien, p 271.) The Appeal of Dick Pacific Construction Company, Ltd., OPA-PA-07-007, involved an IFB and held a bid is non-responsive when it fails to include a resume and the bidder fails to have a Guam business license and specialty license at bid opening. A requirement that bidder possess an operating
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e.
(b)
(c)
(d)
license properly relates to responsibility, notwithstanding solicitation language stating it affects responsiveness. (Cibinic and Nash, p545). (e) The US Comptroller General has held, when the statement of work in and IFB required a transportation service provider to have proper license or other certification of authority to engage in the transportation business, the relevant time for establishing compliance with the authorization requirement was after award, during performance, not as a condition of obtaining the award. (In the Matter of Nilson Van & Storage, Inc., Comp. Gen. B 403009, August 19, 2010.) The decision identified the matter as an issue of responsibility, not responsiveness, saying, [w]e will not review a contracting officers affirmative determination of a bidders responsibility, except in circumstances not alleged or demonstrated here. Where the thing to be provided incidentally involves use of a specialty service, that concerns bidder responsibility, and a bidder who lacks a specialty license can subcontract to provide that part of the work before award. However, if the specialty service is itself the thing to be provided, such as specialty contractor services, then it deals with responsiveness. But consider the necessity of having a business license to obtain the benefit of the local preference provision (see Article II.L above). In that case, the local preference is a factor in determining the lowest acceptable bid. Since that is a matter determined at bid opening, it should follow that having a Guam business license is an issue of responsiveness solely for the purpose of determining if the bid of the bidder claiming the preference is entitled to the local preference, and not to further disadvantage or penalize an off-island bidder.
(f)
(g)
f.
Bid or performance bonds should not be used as a substitute for a determination of bidder or offeror responsibility. (2 GAR 3102(f).)
5.
It should be emphasized that the factors to be considered include material that would never be in a bid package, such as past records of performance and reputation, but such matters must be considered in any event, called for or not. The author takes the view that a determination of bidder
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responsibility is a judgment to be deliberatively made by a balance of any or all such factors of responsibility, and that it is a weighing process, not a tick-the-box method of trivia gathering. The judgment to be made is simply, does the bidder have the capability to perform and the reputation to reasonably conclude the bidder will perform; any one or combination of the factors of responsibility could, in any particular case, justify such a judgment. 6. Consider whether Bidder Qualification Statement (BQS) issues are nonresponsive or nonresponsible: a. See, In the Appeal of Guam Publications, OPA-PA-08-007: Where GSA mandated the requirement of BQS to be a material part of the bid, failure to provide it at bid opening made the bid nonresponsive. The author would argue that everything in the typical IFB BQS concerns bidder responsibility and the J&G Construction case would overturn that issue in that decision; such information is not pertinent to responsiveness, only responsibility.
7.
The prospective contractor may demonstrate the availability of necessary financing, equipment, facilities, expertise, and personnel by submitting upon request ( 3116(b)(3)): a. b. c. evidence that such contractor possesses such necessary items acceptable plans to subcontract for such necessary items; or a documented commitment from, or explicit arrangement with, a satisfactory source to provide the necessary items.
8.
Unrealistic prices or costs, and abnormally low bids and proposals, may be an element of non-responsibility, and may bear on technical acceptability. (See, also, discussion of fair and reasonable price determinations in RFPs in Article VIII.D.10 below.) All parties to a solicitation must act in good faith, and a bid or proposal that is priced below reasonably expectations may mask an ulterior purpose or design; usually, to somehow recover the cost by shortcuts or other behavior after the contract is awarded. One aspect of this abuse is buying in, as defined in the US FAR at Part 3.501. a. In competitive sealed bidding, adequate competition establishes price reasonableness. Accordingly, when an agency contracts on a firm-fixed price or fixed-price with economic price adjustment basesi, compareison of the offered prices should satisfy the governments requirement to perform a price analysis.... However, with cost-reimbursement contracts, cost realism analyses are mandatory. A cost realism analysis determines what the government
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should realistically expect to pay, the offerors understanding of the work, and the offerors ability to perform the contract. (FedGov Construction Contracts, supra, at p 43, footnotes omitted.) b. Results of the [cost or price realism] analysis may be used in performance risk assessments and responsibility determinations. (FAR 14.404-1(d), as quoted in Nash, Cibinic and OBrien, p 588.) Although the FAR refers to this process as cost realism analysis, greater clarity is achieved by calling it price realism analysis. This signifies that such analysis cannot be used to adjust the offered prices but may only be used to make a responsibility determination, a performance risk assessment, or an analysis whether the offeror understands the work. However, it can be used in the latter two purposes only when it relates to an express evaluation factor in the RFP. (Nash, Cibinic and OBrien, p 589; italics in original.) A determination that an offerors price on a fixed-price contract is too low generally concerns the offerors responsibility, i.e., the offerors ability and capacity to successfully perform the contract at its offered price. As part of the technical evaluation, an agency may assess the reasonableness of a low price to evaluate an offerors understanding of the solicitation requirements, so long as the RFP provides for evaluation of offeror understandings as part of the technical evaluation. ... In this case, however, there was no technical evaluation criterion or proposal requirement addressing an offerors understanding of requirements. ... This being so, the agencys concern about the reasonableness of Possehns low prices could not be considered other than as a responsibility matter. Since Possehn is a small business, the agency was required to refer any finding of nonresponsibility to the Small Business Administration (SBA) for review. (Possehn Consulting, Comp. Gen. Dec. B278579, as quoted in Nash, Cibinic and OBrien, p 589, internal citations omitted.) (1) The upshot here was that the offeror could not be considered non-responsive to the technical requirements, but might subsequently be denied award if then found to be nonresponsible in an appropriate determination of responsibility process. As Nash, Cibinic and OBrien note, [p]rice realism can also be used to assess an offerors responsibility. Because this is done outside the evaluation scheme, no evaluation factor is needed [to be stated in the RFP or bid] for this use of price realism. (At p 592.)
c.
d.
e.
Price realism is also discussed in a Guam-related U.S. Federal contract case, Guam Shipyard, Comptroller General Decisions, B John Thos. Brown 2011
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311321; B-311321.2, June 9, 2008. (1) For the price realism subfactor of the performance risk evaluation factor, offerors were advised that their prices would be compared to the other prices proposed and the independent government estimate (IGE), that low prices could increase the firms overall performance, and that a contract price is realistic if it is high enough to preclude the [c]ontractor form enduring a significant financial loss in performing the requirements of the contract. The RFP noted that unrealistically low prices increase an agencys risk of performance, since, in an effort to cut losses, a contractor may cut corners on quality, deliver [sic] date, or default, often requiring additional agency involvement as well as reprocurements which consequently may increase the agencys cost of performance. (At p 2; internal citation omitted.) This case is worth reading for its discussion of the price realism concept as well as for the standard to be applied to the analysis, and, additionally, to the way price realism and responsibility determinations are related and distinguished.
(2)
f.
The sensitivity to and concern with abnormally low bids and tenders appears to be an almost universal principle in public government contracting around the world. See, The price is not always right, at http://bloggeddowninprocurement.blogspot.com/2010/11/price-is-no t-always-right.html. It should be remembered that the contractors determination of responsibility is at stake after an award has been made and contract issued. Failure of a contractor to perform satisfactorily can result in damages but also suspension or disbarment from further government contracting. (5 GCA 5426; and, Who's Responsible Here?.)
g.
9.
Inquiry into determination of responsibility: a. If such contractor fails to supply the requested information, the Procurement Officer shall base the determination of responsibility upon any available information or may find the prospective contractor nonresponsible if such failure is unreasonable. (2 GAR 3116(b)(2)(B).) (1) The author is of the view that any request for information that is plainly insignificant, especially when compared to other more substantial factors to be considered, is of itself
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unreasonable, and the failure or refusal to provide that information would be reasonable; but would you want to chance it? b. The inquiry is not required in every case. The extent to which a review or investigation should be conducted will depend on the value and size of the procurement, and the bidders or offerors past record of contract performance in the public and private sectors. Official Commentary No. 2, MPC 3-401.) When the agency had reason to suspect an offerors integrity or other matters bearing on the offerors determination of responsibility, and does not conduct a responsibility inquiry prior to selecting the offeror as best qualified, it engages in serious error. (In the Appeal of Latte Treatment Center, Inc., supra.)
c.
10.
The interesting requirement for a writing when making the determination of nonresponsibility but not for responsibility: a. Before awarding the contract, the procurement officer must be satisfied the prospective contractor is responsible (2 GAR 3116(b)(4)), but there is no requirement that such satisfaction be justified in anything written. A written determination is only made if the prospective contractor who otherwise would have been awarded the contract is found nonresponsible. ( 3116(b)(5).) (1) The written determination of nonresponsibility must set forth the basis of the finding, be sent promptly to the nonresponsible bidder, and made a part of the procurement file. (a) Determinations of nonresponsibility require the contracting agency to state its rationale for so finding, but no such rationale is required from an agency making a discretionary determination of responsibility. (FedGov Construction Contracts, p 20; footnote omitted.)
b.
(2)
This indicates that the only party who can successfully appeal a finding in respect of responsibility is the bidder who is found to be nonresponsible; the decisions generally are very deferential to the agency when the agency makes a finding of responsibility, but are more careful when dealing with determinations of non-responsibility, which reflect on a bidders character and reputation. It has been said that
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procuring officers have greater discretion when dealing with issues of responsibility than issues of responsiveness, meaning their discretion to determine responsibility is greater than their discretion to judge responsiveness. (3) Recall the Browning-Ferris Matter from Hawaii, supra. At first blush, it seems incredible that a bidder who lacked so many qualifications could be found responsible. But the appeal tribunal there did not make a finding that the bidder was responsible. What the appeal tribunal decided was that it would not sustain the appeal of a higher bidder to overturn the procurement officers determination of responsibility. Thus, higher bidders have a very heavy burden to overturn any determination of responsibility; they, in effect, must prove the procurement officers determination of responsibility was the result of clearly unreasonable error, fraud or other serious fault, such as, perhaps, ethical violations.
c.
In contrast to the many requirements in the procurement regulations for the making of written determinations and keeping of records, there is no requirement that the finding of responsibility be written or recorded. Why is that? (1) Consider the policy implications when questioning why the government should be given wide discretion to determine that a bidder/offeror is responsible. Remember, it is the prospective contractors responsibility that is in question, that is, the lowest responsive bidder. It is in the governments interest to acquire the lowest price. By placing too precious a standard on bidder responsibility, or by allowing higher bidders to complain too critically about the low bidder, the procurement regulations would tend to defeat that low price objective. Consider the policy implications when questioning why the government should be required to justify a determination of nonresponsibility. The key factors to responsibility are judgments of capability and integrity, boiled down to character. Labeling bidders nonresponsible is seen as almost slanderous of their trade and reputation. The common law has long protected an individuals character and reputation, requiring strong proof of the slanderous label and objective community standards, and this is reflected in the requirements for findings of nonresponsibility. The author suggests, therefore, that it would be good practice that any determination of nonresponsibility differentiate between
(2)
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any findings of capability and of integrity, so as to minimize any imputation of lack of integrity if the basis for the nonresponsibility determination is lack of capability. L. Qualified Bidder lists: The GSA has recently been publishing notices to all interested vendors/contractors advising it is in the process of establishing a vendor list, and soliciting the identities and interests of potential contractors. The contractors are asked to submit a copy of business license, company address, contact name and phone and fax number, together with their area of interest, such as hardware supplies, auto repair services, etc. This is intended to establish solicitation mailing lists (5 GCA 5231), commonly referred to as qualified bidder lists. 1. Since solicitations are generally meant to be initiated by distributing and mailing solicitations to potential contractors (see bidding timing, in Article VI.C above), this is a perfectly sensible thing to do, and all potential contractors should provide that information to GSA (and keep it current) if they have any desire to obtain GovGuam business. This is broadly reminiscent in notion to the Federal governments Central Contractor Registration (http://www.ccr.gov/ ), but the CCR is much more passive and restrictive, in contrast to the local procurement requirements to actively seek out competition. Prospective suppliers may be prequalified for particular types of supplies, services and construction. Solicitation mailing lists of potential contractors shall include but shall not be limited to such prequalified suppliers. (5 GCA 5231.) Distribution of solicitation shall not be limited to prequalified contractors, nor may a prospective contractor be denied award simply because such contractor was not prequalified. (2 GAR 3117(a)(1).) The fact that a prospective contractor has been prequalified does not necessarily represent a finding of responsibility. (Id.) There is nothing to prohibit GovGuam from soliciting any information about any need or upcoming solicitation or prospective bidder qualifications; indeed, there is much merit in that. But, such information gatherings are not source selections, cannot take the place of proper source selection solicitation, and should not preclude or disadvantage any potential contractor who did not respond to the information request from taking part in the solicitation, nor favor any potential contractor who did. (2 GAR 3117(a)(1).)
2.
3.
4.
5.
6.
M.
What information is available from an IFB? Information in all bids is publicly available from the time the bids are opened, except for certain confidential
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information designated by the bidder in the bid. (2 GAR 3109(l)(2) and (3).) See, Order Denying Purchasing Agencys Request to Seal Portions of Procurement Record, December 22, 2010, OPA-PA-10-010. 1. The opened bids shall be available for public inspection except to the extent the bidder designates trade secrets or other proprietary data to be confidential.... (2 GAR 3109(l)(2).) Prices and makes and models or catalogue numbers of the items offered, deliveries, and terms of payment shall be publicly available at the time of bid opening regardless of any designation to the contrary. (Id.) Note the discussion of 5 GCA 5485 at Article XXII.D below regarding the action and remedies that are available if procurement data is improperly withheld. Transparency of the criteria and process of bid evaluation is crucial in bolstering the bidders trust in the fairness of the procedures. Just as bidders should be allowed to be present at the opening of the bids, bidders should also be informed of the outcome of the selection, allowing them to review the evaluation result. (Public Procurement Asia/Pacific, supra, Part 1.2.)
2.
3.
4.
N.
A Note on All or None bids: Why not take part of me? 1. The standard General Terms and Conditions for GovGuam IFBs has a clause that reads something like this, taken from a recent GPA bid: ALL OR NONE BIDS: Unless otherwise allowed under this Solicitation, all or none bids may be deemed to be non-responsive. If the bid is so limited, the Government may reject part of such proposal and award on the remainder. NOTE: By checking this item, the Government is requesting all of the bid items to be bidded [sic] or none at all. The Government will not award on an itemized basis. Reference: Section 3-301.06 of the Guam Procurement Regulations. 2. The first part of this provision is OK, but the second part in the Note is complete lore. Lore would have it that the government can force a bidder to bid all items in the solicitation, otherwise the bid is non-responsive, even if the bidders prices on the selected items bid are lowest. This is wrong for two reasons, at least: a. First, the referenced regulation (3-301.06) does NOT say that the government has the power to choose all or none, so does not at all support the proposition made in the Note. (See 2 GAR 3115(f),
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the current codification of the regulation.) The regulation ( 3115(f)) expressly gives the bidder, not the government, the power to make its own bid all or none, unless the IFB specifically disallows that choice. If the IFB is silent and thereby allows such a bid, the government is limited to either accepting the bid as a whole or rejecting it. That is the gist of the first part of the all or none clause, which the is the only part of the all or none clause which is consistent with the referenced regulation. b. Second, the claim that the government will not award on an itemized basis runs contrary to an express legal requirement: (1) Each solicitation issued by the territory shall provide that any bid or proposal may be rejected in whole or in part when in the best interest of the Territory.... (2 GAR 3115(e)(2); see, 5 GCA 5225.) Clearly, the government cannot waive its right to reject in the part. It is a legal requirement that GovGuam must be able to cherry pick amongst the bids to obtain the best prices for items, and any mandated provision in an IFB which stymies that requirement is contrary to the law. Recall also the policy of the law mentioned above, to provide increased economy in territorial activities and to maximize to the fullest extent practicable the purchasing value of public funds of the Territory. Any provision inserted in an IFB which prevents the government from cherry picking amongst the bids defeats that policy.
(2)
(3)
c.
Further, consider the anti-competitive effect if a bidder can beat the pants off all others on 95% of the items, but does not have a product in its lineup for the other 5%. By eliminating that vendors ability to bid the solicitation only because the vendor lacks the full range of products sought, the government loses the benefit of the vendors low cost on most of the items, and the vendor loses the business to higher cost competitors. This is particularly anti-competitive if an IFB can be purposefully structured to achieve that end.
VII.
MULTI-STEP SEALED BIDDING (2 GAR 3109(r)) A. This is a variant of a competitive sealed bid method of source selection, being a two-phase process consisting of a technical first phase where offerings are evaluated for product acceptability, and a second phase where the lowest bid is picked from amongst all the bidders with acceptable offerings. It is solicited by an IFB and defined by the specifications of the IFB.
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B.
Multi-Step bidding is not the same thing as competitive sealed bidding and cannot be used interchangeably with competitive sealed bidding, even though the regulations but not the law (5 GCA 5211(h)) might imply it is an equal alternate form of competitive sealed bidding (2 GAR 3109(a)). This distinction is important because of the policy preference for competitive sealed bidding. 1. The separate description of Multi-Step Sealed Bidding in 5 GCA 5211(h) confirms its unique status and differentiation from the standard Competitive Sealed Bid process. It is only to be used when it is impractical to initially prepare an adequate purchase description of the item or supply needed (2 GAR 3109(r)(2)); normally, the government would be expected to adequately describe what it is it needs. As the Commentary to the ABA Model Code parallel section 3-202(8) instructs, [t]o provide additional flexibility [to competitive sealed bidding] in meeting the designated public need, multi-step competitive sealed bidding is authorized. The evaluation of Competitive Sealed Bids is a one-phase process to evaluate product acceptability, that is, responsiveness (2 GAR 3109(n)(3), before awarding the to the lowest cost bidder. Multi-step Sealed Bidding, on the other hand, is a two-step (or more) process in which bidders submit unpriced technical offers which are evaluated in a process intended to narrow the scope of specifications of the territorys needs as informed by the bidders technical offers, followed by consideration of the sealed prices and determination of lowest cost. Multi-Step Sealed Bidding is therefor a variant derivative of the Competitive Sealed Bidding method of source selection, and less preferential to the basic Competitive Sealed Bid method.
2.
3.
C.
Multi-step bidding is designed to obtain the benefits of competitive sealed bidding ... and at the same time [obtain] the benefits of the competitive sealed bid proposals procedure.... (2 GAR 3109(r)(1).) 1. The competitive sealed proposal method of source selection was initially adopted as part of the Guam Procurement Act but was impliedly disapproved by the Legislature when that method was repealed in 1985 (PL 18-8:8). Competitive sealed proposals are no longer allowed under Guam law or regulation. (Fleet Services, Inc. v. Dept. of Administration, 2006 Guam 6, 15.) Although competitive sealed bidding is the preferred method of source selection, the repeal of the competitive sealed proposal method indicates the multi-step bidding process does not carry the same favor. Multi-step bidding can only be used when it is not practical to prepare initially a definitive purchase description. (Sub(r)(2).) Purchase
2.
3.
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description generally has the same meaing as specification. (2 GAR 4104(4).) a. The CPO/GSA has admitted that multi-step bidding is inappropriate for the procurement of standard, commercial off-the-shelf supply items. (See, Appellee Response to Petition to Compel Decision..., OPA-PA-09-011, Nov. 19, 2009.)
4.
It is noted that OPA has recently published notice of a multi-step bid solicitation for office space. Real property is generally thought of as being unique, and every piece of real property has its own characteristics, unlike, say, standard commercial items such as air conditioners, pick-up trucks and copiers. But, for purposes of appreciating the appropriate use of this method, consider whether it would be appropriate when limited to, for instance, condominiumized (thus, multiple owned) office space in a particular building where every office had identical floor plans.
D.
The first phase can consist of multiple steps. See, generally, 2 GAR 3109(t). 1. The first phase consists of unpriced technical offer submissions in response to the specifications of the IFB. It is contemplated that discussions of the technical aspects of the technical offer can be conducted between the procurement officers and the bidders solely for the purpose of facilitating understanding of the technical offer and purchase description of the IFB. a. Discussions are only conducted to evaluate and determine the acceptability of technical offers. (2 GAR 3109(r)(1), (r)(2)(a).) It follows from this that, during the phase one discussion, where appropriate, technical offers can be amended and supplemented with information may be provided by the offerors to demonstrate the acceptability of their offers. Furthermore, during phase one, the government may make minor amendments (not of such magnitude as to change the original field of competition for, or scope of, the contract) to the original IFB purchase description to reflect a better knowledge of what offerors may reasonably be expected to offer. (2 GAR 3109(r)((2)(b).) (1) Bear in mind that purchase descriptions are meant to be drafted, and therefore redrafted by amendment, so as to maximize competition while acquiring the essential functions required to meet the Territorys minimum needs, as discussed in Article XIV, Specifications, below.
2.
b.
c.
If any contemplated amendment to the IFB specifications will

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significantly change the nature of the procurement, the IFB must be cancelled (sub(t)(2)), and presumably re-bid. d. Information derived from one offeror is not supposed to be disclosed to any other offeror during these discussions. (2 GAR 3109(t)(5).)
3.
The technical offers are then evaluated in the first phase solely in accordance with the criteria set forth in the IFB, including any allowable minor amendments. (Sub 3109(t)(4).) a. The evaluation is not intended to rank the offers in any way (unlike RFPs for services which do engage in a ranking process). Rather, the technical offers are only to be categorized as either: (1) acceptable, that is complies with the minimum specifications of acceptability, or potentially acceptable, that is, reasonably susceptible of being made acceptable, or unacceptable.
(2)
(3) b.
Unacceptable offers are tossed out and not further considered, but the procurement officer must make a written record of the basis for the unacceptability. (Sub3109(t)(4)(c).) Potentially acceptable offers must be made acceptable by discussions and amendment of the offer or the specifications, as mentioned above, before the time set for opening of the priced bids. If not, potentially acceptable bids are treated as unacceptable. As mentioned above, [i]t is improper to use responsibility-related factors or subfactors if the evaluation is merely to determine acceptability of a proposal. (Nash, Cibinic and OBrien, p 271.) Any negative responsibility-related factors can only be used to disqualify the offeror as non-responsible in an appropriately conducted inquiry into and determination of responsibility, not to reject the offer as unacceptable. (Offerings which do not meet the acceptability requirements shall be rejected as nonresponsive; 2 GAR 3109(n)(3).) (1) A comparable source selection process to multi-step bidding, called technically acceptable/lowest price (as distinguished from technically accpeptable/best value), is used in US Federal contracting, with a similar evaluation process. (Two Comptroller General Decisions illustrate the analytical differences between those two processes: Frontier Systems
c.
d.
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Integrators, LLC, B-298872.3, February 28, 2007, dealing with technically acceptable/lowest price, and Guam Shipyard, supra, dealing with technically acceptable/best value.) (2) In the Frontier Systems case, the evaluation criteria included information going to corporate experience and past contract performance. The protestor alleged there was insufficient information in the proposal to establish an acceptable determination, therefore the proposal should have been rejected. The Comptrollers Decision stated: (a) [T]he agencys acceptability determination with respect to CSPS past performance was ultimately a matter of CSPS responsibility. As a consequence, the Navy retained the discretion to find CSPS past performance acceptable, notwithstanding the language in the RFP concerning the number of questionnaires offers were to submit as part of their past performance evaluation. (At p 6.) Where an agency utilizes a lowest price technically acceptable source selection process, the FAR provides that past performance need not be an evaluation factor at all. However, when it is included, it cannot be utilized for the purpose of making a comparative assessment; rather, past performance is to be determined solely on a pass/fail basis. (Id.) Since past performance ultimately is a matter of responsibility, the agency could look beyond an offerors compliance with the information requirements set forth in the RFP, and therefore retained the discretion to find CSPS past performance acceptable despite CSPS failure to submit three past performance questionnaires. (At p 7.)
(b)
(c)
e.
Compare the RFP process for professional services, which, unlike phase one evaluations, does involve ranking of best qualified offers, and which does allow responsibility-related factors to be considered but only for the sole purpose of assessing the relative order (the rank) of the competing qualified offers, as discussed below.
4.
Discussions are only had or continued with acceptable or potentially acceptable bidders to further refine the offers and specifications, not with
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unacceptable offerors. Once discussions are begun, any bidder who has not been notified that its offer has been finally found unacceptable may [at its own behest or on the request or suggestion of the government] submit supplemental information amending its technical offer at any time until the closing date.... (sub 3109(t)(5)); thus, unacceptable offers are not afforded that opportunity (sub 3109(t)(6)). a. Note that this implies that there is an initial screening for unacceptable and potentially acceptable offers before discussions begin, based solely on the offer documents. If so, discussion are only had with potentially acceptable and acceptable offerors.
E.
Phase two is initiated once the procurement officer determines there are sufficient acceptable unpriced technical offers to assure effective price competition without further discussions or amendments to the specifications. (Sub 3109(r)(4).) 1. Timing and method for submitting bid prices : a. 5 GCA 5211(h) suggests that the multi-step bid is to consist of two IFBs, one issued requesting the submission of unpriced offers, then to be followed by an Invitation for Bids limited to those bidders whose offers have been qualified. This also suggests that priced bids are not intended to be solicited until qualified bidders have been identified by the evaluation of acceptable bids in phase one. The implementing regulations, however, provide slightly different direction. They expressly contemplate the possibility of requiring submission of priced bids in separately sealed bids at the same time as the submission of the phase one technical offers. (2 GAR 3109(t)(b) and 3109(v)(a).) (1) If that option was not specified in the original IFB, then, once phase one is completed, and also if during the phase one discussions the technical offers have been altered or the specifications have been amended as allowed in phase one, the bidders shall be invited to submit a price bid. (2 GAR 3109(v)(b).) Thus, if the nature of a bid offering is affected by the changes made in the phase one discussions, the impact on the bid price required to be submitted with the original offer can be changed in the final price submission.
b.
2.
Since bid prices are not to be disclosed prior to the conclusion of phase one, prices, should not be discussed nor considered during phase one. Phase two is conducted by opening all priced bids from all acceptable
3.
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technical offerors, and determining the lowest bidder in the same manner as in competitive sealed bidding, except only the winning bidders technical offer is publically disclosed. (2 GAR 3109(v)(2).) a. It bears repeating that if a potentially acceptable offer cannot be made acceptable, it is out of the running and its price bid should not be solicited, opened or considered. Unlike competitive sealed bid openings, however, where all bids are available for public inspection (2 GAR 3109(l)(2)), only the unpriced technical offer of the successful bidder is disclosed ( 3109(v)(2)(c) in multi-step bids, unless the Procurement Officer determines in writing that public inspection of [the unsuccessful bidders technical offers] is essential to assure confidence in the integrity of the procurement process ( 3109(v)(2)(d)). Of course, identified trade secrets and proprietary data might be withheld in either event. And, again, all bid prices are disclosed; it is only the technical details of the unsuccessful bid offers that are not.
b.
VIII.
REQUESTS FOR PROPOSALS A. Competitive sealed proposals are not allowed on Guam. See Article VII.C.1 above. 1. The Guam Legislature ... repealed [the prior provision allowing competitive sealed proposals] when it passed section 8 of Guam Public Law 18-8.... The repeal of the statute repealed the corresponding regulation. (Fleet Services, Inc. v. Dept. of Administration, 2006 Guam 6, 15.)
B.
Requests for Proposals (RFPs) are normally only allowed for professional services. This entails an examination of what is meant by each of professional and services: both elements, independently, must be satisfied. 1. What is meant by professional? a. Only the services of accountants, physicians, lawyers, dentists, licensed nurses, other licensed health professionals and other professionals are procured by a Request for Proposals. (5 GCA 5216, 5121(a); 2 GAR 3114(a).) The services of the professions of architecture, engineering and land surveying may also be procured by RFP as discussed in Article VIII.E below. The issuance of an RFP for the operation, management and maintenance of the Guam Mass Public Transit System was improper, since that did not involve the procurement of professional services. (Fleet Services, Inc., supra, 34.)
b.
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c.
Bad debt collection services must be procured by competitive sealed bid because they do not fall within the professional services exception for an RFP. (In the Appeal of Oceania Collection Services, OPA-PA-08-006.) It is worth noting that the specifically itemized professionals (accountants, lawyers, dentists, licensed nurses, other licensed health professionals, as well as architects, engineers and land surveyors), all have one common trait: they are licensed, indeed specifically so in the case of licensed nurses and licensed health professionals, and, for the most part and to some degree or another, they all are also regulated by their professional associations of peers and codes of conduct or ethics. There is an ancient legal canon of construction of legislation (Ejusdem generis) that holds, where legislation provides a specific list of items, followed by a general descriptive term (here the general description is and other professionals), the character of the items in the list determine and limit the meaning of the general term. Using this canon of construction, RFPs can only be used for licensed professional services. (1) Query whether veterinarians, real estate brokers or appraisers fall within this framework? Cosmetologists?
d.
e.
f.
This description of professional is arguably contrary to many RFPs issued on Guam for specialty occupations, even highly skilled ones, such as IT specialists, consultants, large systems operators (like ports and power plants) and finance managers (as in the ASC Trust Appeal, discussed below). There may be no bright line separating professional from non-professional services, but these occupational services do stretch the envelope. So far, the author is unaware of any challenge to this seemingly improper appropriation of the RFP method for such unlicensed services. Nor is he prepared to speculate on any outcome to a challenge in any such case; but to avoid protests on this issue, any agency might give this situation some thought before proceeding down the path of using an RFP for any service which does not fit within the traditional professions discussed above. (1) On February 25, 2010, the Office of Public Accountability issued an RFP for Consulting Services, which required the specifications described as follows: (a) B. Consultant Experience. The proposal should include a written, verifiable discussion of the offerors
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knowledge, understanding, and consultant experience. A narrative of the ability to handle the work specified in the Scope of Services should also be included. If the offeror does not possess experience similar to the services required, the proposal should provide any pertinent information or experience that may qualify the offeror for consideration. (b) C. Education and Technical Expertise. All individuals who will be involved in performing the Scope of Services must possess the necessary education and technical and professional expertise to serve as a consultant. Proposals should specifically identify such person(s) and include their resumes; the resume may include awards or recognition for services, special approaches, or concepts relevant to the required services. All Certified Public Accountants (CPA) must include a copy of his/her/their CPA license(s) in the proposal. There is no specification in this RFP strictly limiting the consultant services to the professions specified in the Procurement Law. As such, this RFP illustrates the grey areas which are being explored by government agencies to expand the basic notion of professional services.
(c)
(2)
On March 1, 2010, the Guam Dept. of Labor published an RFP in the Pacific Daily News for providers of training services. Also on March 1st, Guam DPHSS published an RFP in the Marianas Variety for several health-related services, including diabetes outreach worker, preinatal care coordinator and quality assurance coordinator. Query how far this can be pushed before the exceptions to professional services overcome the rule? Might not these consultancy services be just as readily procured under the multi-stip bid process with equivalent efficacy and adherence to allowable methods of source selection? Or couldnt these services in some cases, at least, be acquired by employment rather than contract?
(3)
(4)
2.
What is meant by services?
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a.
Services means the furnishing of labor, time or effort by a contractor, not involving the delivery of a specific end product other than reports which are merely incidental to the required performance. It does not include employment agreements, collective bargaining agreements, but does include the printing and processing for printing of items which are, when delivered, in finished form. (5 GCA 5030(s).) Thus, for instance, a requirement to provide a canned or off the shelf computer program is not a service, but a requirement to write such a program is a service. Similarly, a requirement to provide services to design, integrate, install and maintain a computer or document management system would likely constitute a service, whereas, a requirement to design, integrate, install, maintain and provide a computer or document management system would not, because the provision of the equipment for the system necessarily involves the delivery of a specific end product other than reports which are merely incidental to the required performance.
b.
C.
Special legislation, however, may authorize the RFP process for particular other procurements. (See, 5 GCA 5210(a): Unless other wise authorized by law ....) For instance, PL 29-114 authorized the solicitation of RFPs for the design, finance, construction and maintenance of a high school in Tumon. The fact that the legislature specifically authorized an RFP in that particular instance underscores, under the general provisions of the Procurement Act, that RFPs cannot normally be used for other than professional services. The procurement process for RFPs is built around a negotiation process, and has its own competitive selection procedures and other requirements. See, generally, 2 GAR 3114. 1. Competitive selection procedures shall be used when the contract amount is over $5,000, otherwise small purchase procedures (discussed in Article XI below) are to be used when under that amount. (2 GAR 3114(b).) A detailed determination must be made before undertaking any announcement of need for services requiring competitive selection procedures ( 3114((d)), which includes: a. the nature of the relationship to be established between the using agency and the contractor the using agency has developed, and fully intends to implement, a written plan for utilizing such services, which will be included in the contractual statement of work.
D.
2.
b.
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3.
The need for services is essentially the RFP itself, and adequate public notice of it must be given at least 10 days in advance of due date. Public notice is to be given in the same manner as competitive sealed bids (see Article VI.C above) and, additionally shall consist of distributing Requests for Proposals to persons interested in performing the services. (2 GAR 3114(e).) The contents of the RFP is specified in 3114(f), and includes detailed information regarding the persons (and their qualifications) who will be providing the services. a. Note that in this instance, such personnel information is an issue of responsiveness because those services are precisely what is being sought, whereas, when products and other things are being sought, such personnel issues are incidental and go to issues of responsibility. Note also the obligation of offerors to clarify ambiguities in the RFP prior to submitting their proposals, similar to the discussion of mistakes and seeking clarification in the Article above on Competitive Sealed Bidding. While there might be the possibility of clarifying and fine tuning a proposal in the discussion stage, the government might simply skip the discussion stage and go directly to evaluation of proposals: The head of the agency conducting the procurement ... shall evaluate all proposals submitted and may conduct discussions.... (2 GAR 3114(i).)
4.
b.
5.
Three Stages: The Public Auditor has described the RFP process as occurring in three stages (In the Appeal of Guam Community Improvement Foundation, Inc., (vs DPW) OPA-PA-09-005, Decision for Protective Oder, at pp 3-4): (1) (2) (3) the proposal stage; the price solicitation, negotiation and agreement stage; and the award stage.
6.
The processing of properly solicited offers in an RFP to award involves the steps described briefly as follows, and more fully discussed below. The author prefers this analysis to the second of the three stages mentioned above, which, in the authors opinion, conflates price issues into the solicitation and evaluation issues. a. First, evaluate the proposals for the qualification and responsiveness of the offerors to determine which offerors qualify (2 GAR 3114(f)(2));
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b.
Second, rank the offerors proposals from most best qualified to least best qualified based on the qualification (and, to some extent, responsibility) of the offerors (2 GAR 3114(j)); Third, starting with the most best qualified offeror, negotiate with each offeror in turn down the rank (2 GAR 3114(l)(4); and see 3114(l)(6)), to determine if the government and an offeror are able to agree on a price that is "fair and reasonable". (2 GAR 3114(l).) If compensation, contract requirements, or contract documents cannot be agreed upon with the best qualified offeror, a written record stating the reasons therefore shall be place in the file.... (2 GAR 3114(l)(4)(A).) (1) In the GCIF Appeal, OPA-PA-09-005, the Public Auditor noted that the negotiation phase contemplates the possibility of price adjustments, including increases, based on the particular terms and conditions negotiated. However, negotiated increases over and above the prices indicated in the offer must be evaluated to determine that they are fair and reasonable compensation, and the greater the ultimate price is over the price originally submitted, the greater is the scrutiny required to determine that the original price was submitted in good faith and not simply to leverage a higher ranking. (See, Decision, pp 18 et seq.) (a) DPW may not determine that IBCs increased finance costs are fair and reasonable if they result from an unachievable or unrealistic low cost financing proposal that was submitted in bad faith. ... Indeed, considering the large cost increase, DPW should at least be highly suspicious of whether IBC took advantage of the open ended evaluation criteria.... Thus, the Public Auditor finds DPW must determine whether IBCs proposal was made in good faith by conducting an analysis as to why IBCs financing costs [greatly exceed its original offer].... (Decision, p. 19; emphasis added.)
c.
(2)
In a similar appeal arising from the same JFK RFP, the GEFF Appeal, OPA-PA-007, supra, the Public Auditor again focused on the good faith issue rather than framing the analysis on the fair and reasonableness of the offered price. (a) The next issue is whether the total project cost in IBCs proposal was made in good faith. ... Thus, the crux of this issue is whether IBCs total cost for the
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JFK reconstruction project increased due to DPW discovering that IBCs proposed costs were made in bad faith.... The Public Auditor finds that DPWs existing certification of procurement activities were (sic) performed in good faith, however, it is insufficient because it lacks a proper analysis of whether IBCs proposal was made in good faith. (Decision, at pp. 9-10.) (b) The Decision went on to criticize the analysis for, among other reasons, failing to consider alternative amortization periods, failing to justify the apparent material difference between maintenance costs offered and maintenance costs actually obtained in other projects, and other unexplained costs totaling approximately $19 million. This is precisely the analysis that is conducted to determine fair and reasonable cost, and does not require any reference to or consideration of good or bad faith.
(3)
The author considers this to be a bit of a Catch 22 for an offeror and an inapt focus on good or bad faith (see discussion above on the duty of good faith, in Article II.F.1 under the Purposes and Policies of the procurement law). If an offeror submits an offer allowed by the specifications, how can it be in bad faith ? (a) Recall that bad faith, at least in the context of determining remedies, requires a showing of reckless disregard of clearly applicable laws or regulations (2 GAR 9104(a)(3).) Responding, as required, to the specifications of a solicitation would rarely if ever evidence any disregard of applicable law. This underscores the necessity of proper procurement planning (see discussion in Article II.K above), and careful specification drafting (see discussion in Article XIV.A below).
(b)
(4)
The author respectfully suggests that the issue here is more one of determination of the fairness and reasonableness of the price, not the good or bad faith of the offeror or agency. Thus, the more appropriate analysis would be to compare the negotiated price against the offered price of the other offerors to determine whether the negotiated price is fair and reasonable. (See the discussion immediately below in this
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Article VIII.D.10 concerning the evaluation criteria used to determine a fair and reasonable compensation, which may include comparison to other offers.) (a) Even absent bad faith, the award should not go to an offeror if the price is not fair and reasonable; nor should an offeror who took advantage of loose specifications be denied the award if the compensation is fair and reasonable.
d.
And, at the conclusion of negotiations resulting in the award, the agency shall prepare a memorandum, available to the public, setting forth the basis of the award, including: (1) how the evaluation factors stated in the RFP were applied to determine the best qualified offerors; and the principal elements of the negotiations, including the significant considerations relating to price and the other terms of the contract. (2 GAR 3114(m); also, the GCIF Appeal, supra, p. 20.) In the GEFF Appeal, supra, the Public Auditor held that DPW must conduct a more complete analysis of why financing costs increased from what IBC initially proposed, and that analysis must be made part of the procurement record. (Decision, at p. 16.)
(2)
(3)
7.
The Evaluation of RFP offers: As in the competitive sealed bid process, proposals must only be evaluated to determine qualification based on factors stated in the RFP. ( 3114(f)(2).) a. Even under PL 29-114, mentioned above, the legislation required that the scope of the contractors responsibilities were only to the extent provided ... in the Request for Proposals. (58A106.) In the GCIF Appeal, id., the Public Auditor criticized the specifications of the RFP for being so broadly written as to invite outlying offers, and that there was no evaluation criteria specified to determine if price offers were realistic or achievable, yet she did not upset the bid. The author agrees with that result, as the best time to protest improper specifications and evaluation criteria is before the offers or bids are submitted. (See discussion of timing for filing preopening Protest issues, in Article XVI.G.4 below.) RFP Evaluation Factors: In an RFP, the evaluation of qualification includes a cursory consideration of the offerors ability and other
b.
c.
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factors of responsibility (see Article VI.K.4) at the outset to effectively create a shortlist of responsible candidates for award. (1) But remember, in the determination of responsibility, the ultimate determination of capability is judged as of the time of award, not proposal submission or negotiation (2 GAR 3101(1), with references to 2 GAR 1106(27) and 3116). Types of factors to be evaluated. 2 GAR 3114(f)(2) identifies factors which may be appropriate to use in conducting the evaluation for qualification. (See, Article VI.K.4.) The minimum factors are : (a) (b) the plan for performing the required services; ability to perform the services as reflected by technical training and education, general experience, specific experience in providing the required services, and the qualifications and abilities of personnel proposed to be assigned to perform the services; the personnel, equipment, and facilities to perform the services currently available or demonstrated to be made available at the time of contracting; and, a record of past performance of similar work.
(2)
(c)
(d) (3)
Price is not a proper evaluation factor for qualification of a proposal in an RFP, nor in ranking qualified offers. The factors to be used in the evaluation of proposals in an RFP, as specified above, are all exclusively related to the issue of responsibility (compare 2 GAR 3114(d)(2) and 3116 (b)(2)(A).) Glaringly, price is not among the factors suggested.. (a) This should be analogized to phase one in multi-step bidding, where only the technical aspects of the bid are examined, bearing in mind that the difference between the multi-step process and the RFP process is that all acceptable bids are considered equally qualified, but in an RFP, the qualified bids are ranked. Price probably should not even be mentioned in the proposal, again analogizing to the multi-step bid process. It is not mentioned in the regulations as
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(b)
relevant factor (above) nor as a proper topic of discussion in the evaluation process. The purposes of discussions in the evaluation of RFPs are only to: i) (A) determine in greater detail such offerors qualifications, and (B) explore with the offeror the scope and nature of the required services, the offerors proposed method of performance, and the relative utility of alternate methods of approach. ( (2 GAR 3114(i))) Price considerations, again, are pointedly not a purpose of qualifying discussions.
ii)
iii)
(c)
In the chronological sequence of events in the RFP process as specified in 2 GAR 3114(f) et seq., price consideration does not come up until after the subject of the selection of the best qualified offeror, which is found in 2 GAR 3114(j). In the next subsection, 3114(k), the regulations say, without qualification, only the offeror determined to be best qualified shall be required to submit cost or pricing data, which is to be submitted prior to commencement of negotiations, not in the proposal nor as a topic in discussions. No cost or pricing data is intended to be submitted before the final negotiation process begins. Negotiations are not commenced until the qualified offerors are ranked. The head of the agency conducting the procurement ... shall negotiate a contract with the best qualified offeror for the required services at the compensation determined in writing to be fair and reasonable (2 GAR 3114(l)). This exclusion of price as a factor in the qualifications of offers makes good policy sense because whatever price is submitted in the proposal is only a gambit in any event. The offered price is not binding on anyone and can be misleading at the evaluation stage due to lax specifications that get tightened during subsequent negotiations. (See GEFF Appeal, Decision, at p. 10.)
(d)
(e)
(f)
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(g)
While price ought not to be an evaluation factor, many RFPs on Guam have included it, and the issue has not, to the authors knowledge, been contested or decided, as the following cases illustrate. i) The JFK protests, the GCIF and GEFF Appeals, supra, although not strictly ones for professional services, illustrate the tensions that are created, and protests that arise, when offerors are asked to submit pricing with their proposals. Expectations of and disputes over price can take over the consideration of qualification even before negotiations have commenced or fair and reasonable consideration is finally determined. In the JFK appeals, protests and the appearance of favor or impropriety have been unnecessarily generated by the fact that the low price offered by the selected most qualified offeror seems likely to be far less than the ultimate price to be negotiated. The issue would have been avoided if price had been excluded as a factor in the first place. In the Appeal of ASC Trust Corporation, OPA-PA-09-010 is another appeals case where the interjection of price as an evaluation factor led to a confused analysis of the solicitation. See discussion of this case in Article XXIV, below.
ii)
(h)
The ICMAs Service Contracting text describes one model of RFP evaluation for non-professional services (based on competitive sealed proposals, also called competitive negotiations, a method not allowed under Guam law), at pp. 103-105. It suggests that pricing data is not introduced into the evaluation process until the initial evaluation is complete and the shortlist of finalists is established, at which point there is a oral presentation by the finalists. It is at that time that the offerors may be asked to provide a non-binding estimate of costs of services supported by draft budget, staffing charts, schedules, etc. In this case, the text says, [w]hile some local government regulations prohibit soliciting cost and hour information in the original submission, requesting the information from finalists is almost
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always permitted. (i) Further but indirect evidence that price is not a factor in RFPs under 5216 is in a recent legislative attempt to interject it as a factor, in acknowledgment that it is not intended to be a factor under current law. (See, Bill 336-30, Sections 3 and 9.)
(4)
Relativity of factors to be evaluated. (a) 5 GCA 5216(c) requires the RFP to state the relative importance of particular qualifications. This means each particular qualification is adjudged independently, with some qualifications being deemed more or less important that other qualifications. This does not mean that a particular qualification is relatively more important in evaluating one offeror against another. 2 GAR 3114(f)(1)(H)(vi) requires the RFP to include the factors to be used in the evaluation and selection process and their importance. Subsection (f)(2) reiterates the relative nature of particular qualifications with reference to [t]he relative importance of these and other factors....
(b)
(5)
Inasmuch as this evaluation of qualification is the essence of a finding of responsibility, the standards and procedures applicable to such a finding (2 GAR 3116 says such standards are equally applicable to offerors as bidders) should at least frame the evaluation process of qualification under an RFP. Of course, any technical qualifications which are more akin to issues of product acceptability (which should be rare given RFPs are primarily intended for solicitation of professional services) should likewise be evaluated by the standards of responsiveness and materiality. (See, Articles VI.I and VI.J.)
8.
RANKING: Unlike the phase one acceptability determination in the multistep bid process (see Article VII.D.3 above), the offerors in an RFP are, after evaluation, ranked in order of best qualified. ( 3114(j).) a. Remember, RFPs are normally only allowed for solicitation of professional services, so the only authorized process of ranking offers allowed anywhere in the Procurement Act (and contrary to many IFBs the author has reviewed) is in the context of RFPs; in IFBs, including multi-step IFBs, lowest cost prevails, pure and simple.
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b.
While responsibility-related factors must not by themselves be used to determine the final qualification of offerors, especially when other technical factors are applicable, in the case of RFPs for services, ability to perform the services, qualifications of key personnel and records of past performance (all factors of responsibility) may be appropriate to consider in conducting the qualification evaluation. (2 GAR 3114(f)(2).) (1) Agencies commonly evaluate factors and subfactors related to responsibility, notwithstanding the fact that a formal responsibility determination must ultimately be made before award of the contract. Such factors and subfactors frequently include experience, staffing, and past performance. This process does not officially constitute a responsibility determination as long as these factors are evaluated on a variable basis.... In Electrospace Sys., Inc., 58 Comp.Gen. 415 (B-192574), 79-1 CPD 264, the Comptroller General stated at 425: Since neither 10 U.S.C. 2304(g) nor applicable regulations in any way restrict other factors that may be used by agencies in selecting the proposal having the greatest value to the Government, we have not prohibited procuring agencies from using responsibilityrelated factors in making relative assessments of the merits of competing proposals.... (Nash, Cibinic and OBrien, p 270.)
9.
Determination of Price: Once ranked, negotiations are begun with the most best qualified offeror over compensation, that is, the price to be paid for the services sought, and then on down the list from most best qualified until an agreement is reached with a qualified offeror. This parallels the multi-step process where prices are not considered until after acceptability of product is determined. See discussion above on price as a factor in evaluation. And, similarly, it would seem to be improper for the government to try to renegotiate the ranking or qualification of the offerors once the process has moved to haggling over price. Determination of Fair and Reasonable: The purpose of negotiations is to reach agreement on compensation which must be determined to be fair and reasonable. (2 GAR 3114(l)(2)(C).) a. In the GEFF Appeal, supra, the Public Auditor noted a substantial price increase between the price offered at the time of submission of proposals, and the time, after negotiation, of apparent intent to award. Recognizing that the negotiated price procedure does not preclude such an increase, she held that the record must substantiate adequate analysis to justify an independent finding that the final
10.
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price is fair and reasonable. (Although she didnt exactly say so in so many words. See Decision at pp 14-16 and Conclusion No. 7.) b. Although the Federal procurement regime is different is significant circumstances from the Model Act, as noted before, it can prove useful as a guide to principles common to both regimes. Here, the author suggests the FAR principles for determination of fair and reasonable are apt guides. See generally, FAR Subpart 15.400, excerpts of which follow. It must be emphasized again, though, that the FAR provisions, in and of themselves, do not apply to GovGuam procurement; they are mentioned here solely for purposes of examples of how the principals of the GovGuam procurement rules might be applied. Under FAR, except in cases of competitive sealed bids, negotiated prices must be fair and reasonable. (Subpart 15.402(a).) Subpart 15.406-1 Prenegotiation objectives. (1) (b) The contracting officer shall establish prenegotiation objectives before the negotiation of any pricing action.
c.
d.
e.
Subpart 15.405 Price negotiation. (1) (a) The purpose of performing cost or price analysis is to develop a negotiation position that permits the contracting officer and the offeror an opportunity to reach agreement on a fair and reasonable price. A fair and reasonable price does not require that agreement be reached on every element of cost, nor is it mandatory that the agreed price be within the contracting officers initial negotiation position. (b) The contracting officers primary concern is the overall price the Government will actually pay. The contracting officers objective is to negotiate a contract of a type and with a price providing the contractor the greatest incentive for efficient and economical performance. The negotiation of a contract type and a price are related and should be considered together with the issues of risk and uncertainty to the contractor and the Government. Therefore, the contracting officer should not become preoccupied with any single element and should balance the contract type, cost, and profit or fee negotiated to achieve a total result a price that is fair and reasonable to both the Government and the contractor.
(2)
f.
The contracting officer should use every means available to

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ascertain whether a fair and reasonable price can be determined before requesting cost or pricing data. Contracting officers must not require unnecessarily the submission of cost or pricing data, because it leads to increased proposal preparation costs, generally extends acquisition lead time, and consumes additional contractor and Government resources. (Subpart 15.402(a)(3).) (1) Note Guam regulations do not generally require cost or price data to be submitted with a proposal unless the contract price is expected to exceed $100,000. (2 GAR 3114(k), 3118(b)(1).) Moreover, as with Federal contracting, cost or price data is generally not required to be submitted where the contract price is based on adequate competition or the markets or by regulation. (2 GAR 3118(b)(2); see, FAR Subpart 15-403-1(b).)
g.
... the contracting officer must require that the information submitted by the offeror include, at a minimum, appropriate information on the prices at which the same item or similar items have previously been sold, adequate for determining the reasonableness of the price. (Subpart 15.403-3(a)(1).) At a minimum, the contracting officer must use price analysis to determine whether the price is fair and reasonable whenever the contracting officer acquires a commercial item (see Subpart 15.404-1(b)). The fact that a price is included in a catalog does not, in and of itself, make it fair and reasonable. (Subpart 15.4033(c)(1).) Subpart 15.404-1 Proposal analysis techniques. (1) General. The objective of proposal analysis is to ensure that the final agreed-to price is fair and reasonable. (1) The contracting officer is responsible for evaluating the reasonableness of the offered prices. The analytical techniques and procedures described in this subsection may be used, singly or in combination with others, to ensure that the final price is fair and reasonable. The complexity and circumstances of each acquisition should determine the level of detail of the analysis required. (2) Price analysis shall be used when cost or pricing data are not required (see paragraph (b) of this subsection and Subpart 15.404-3). (3) Cost analysis shall be used to evaluate the
h.
i.
(2)
(3)
(4)
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reasonableness of individual cost elements when cost or pricing data are required. Price analysis should be used to verify that the overall price offered is fair and reasonable. (5) (4) Cost analysis may also be used to evaluate information other than cost or pricing data to determine cost reasonableness or cost realism.
j.
Subpart 15-401(b) Price analysis. (1) (1) Price analysis is the process of examining and evaluating a proposed price without evaluating its separate cost elements and proposed profit. Price analysis is used to determine if a price is reasonable and acceptable.... (2 GAR 3118(g).)
(2)
k.
Subpart 15-401 (c) Cost analysis. (1) (1) Cost analysis is the review and evaluation of the separate cost elements and profit in an offerors or contractors proposal (including cost or pricing data or information other than cost or pricing data), and the application of judgment to determine how well the proposed costs represent what the cost of the contract should be, assuming reasonable economy and efficiency. Cost analysis includes the appropriate verification of cost or pricing data.... (2 GAR 3118(h).)
(2)
l.
Cost realism analysis. (See, also, discussion of realistic pricing in relation to issues of responsibility in Article VI.K.8 above.) (1) Guam procurement regulations require that [e]valuations of cost or pricing data should include comparisons of costs and prices ... with those of other offerors and any independent territorial price and cost estimates.... (2 GAR 3118(i).) (a) It would seem that no determination of what is a fair and reasonable price can be made in the absence of: i) Adequate competition and comparison of the prices and/or cost of the other offerors; or, An independent price estimate conducted by
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ii)
the agency prior to the fair and reasonable price determination. (b) In the news items following the fall out from the JFK procurement disputes, it was mentioned that the Public Auditor had reserved final decision in the matter pending certain cost justifications. Technically, given the instigation of court proceedings that may have usurped her jurisdiction, there may be some support for the reported view of the DPW Director that the Public Auditor lacked continuing authority of the matter; but substantively the issue of a valid fair and reasonable determination would remain unresolved if there was no basis for the determination of fair and reasonable consistent with an appropriate price realism or cost analysis. i) It is noted that the Public Auditor has admonished key officials, by letter dated August 13, 2010, that each government official has a fiduciary duty to achieve the most reasonable final cost to the government for this project. This exhortation to obtain a reasonable cost is entirely consistent with her duties to use her jurisdiction to promote the purposes of the Procurement Act.
(2)
In the Guam Shipyard case, supra, the Comptroller General approved the Navys finding that Guam Shipyards bid was unrealistically low for several reasons, including lower labor rates than found in approved labor rates, lower material prices than the Navy expected based on its own independent government estimate as well as competing offers, and because the protestors failure to identify any profit added to the agencys concerns about whether the firms substantially lower-priced proposal would affect performance of the contract, since, as indicated in the RFP, financial loss, including a lack of or little profit, may cause a contractor to cut corners in the performance of the required work. (At p 5.) Subpart 15-401 (d): Cost realism analysis is the process of independently reviewing and evaluating specific elements of each offerors proposed cost estimate to determine whether the estimated proposed cost elements are realistic for the work to be performed; reflect a clear understanding of the requirements; and are consistent with the unique methods of
(3)
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performance and materials described in the offerors technical proposal. m. Subpart 15-401 (f) Unit prices. (1) (1) Except when pricing an item on the basis of adequate price competition or catalog or market price, unit prices shall reflect the intrinsic value of an item or service and shall be in proportion to an items base cost (e.g., manufacturing or acquisition costs). Any method of distributing costs to line items that distorts the unit prices shall not be used. For example, distributing costs equally among line items is not acceptable except when there is little or no variation in base cost. (a) The exception for adequate competition, catalogue or market pricing is analogous to Guam regulation. (See, 2 GAR 3118(b)(2); see 2 GAR 3118(c) for definitions and application of the exceptions.)
n.
Subpart 15-401 g) Unbalanced pricing. (1) (1) Unbalanced pricing may increase performance risk and could result in payment of unreasonably high prices. Unbalanced pricing exists when, despite an acceptable total evaluated price, the price of one or more contract line items is significantly over or understated as indicated by the application of cost or price analysis techniques. The greatest risks associated with unbalanced pricing occur when (a) (i) Startup work, mobilization, first articles, or first article testing are separate line items; (ii) Base quantities and option quantities are separate line items; or (iii) The evaluated price is the aggregate of estimated quantities to be ordered under separate line items of an indefinite-delivery contract.
(b)
(c)
(2)
(2) All offers with separately priced line items or subline items shall be analyzed to determine if the prices are unbalanced.
o.
Subpart 15.404-4 Profit. (1) (a) General. This subsection prescribes policies for
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establishing the profit or fee portion of the Government prenegotiation objective in price negotiations based on cost analysis. As noted in the Guam Shipyard case, supra, profit is an important indicator of expected contractor performance. 11. Conduct in negotiations: a. Pre-negotiation discussions shall not disclose any information derived from proposals submitted by other offerors, and the agency conducting the procurement shall not disclose any information contained in any proposals until after award of the proposed contract has been made. (2 GAR 3114(i)(2).) (1) Contract negotiations with best qualified offerors shall be directed toward: (a) making certain that the offeror has a clear understanding of the scope of work, specifically, the essential requirement involved in providing the required services; determining that the offeror will make available the necessary personnel and facilities to perform the services within the required time; and agreeing upon compensation.... (2 GAR 3114(l)(2).)
(b)
(c)
(2)
The Nash, Cibinic and OBrien text thoroughly canvasses the competitive negotiation process under the Federal regime, and, again, its principles would appear consistent with the policies of and equally applicable to the Guam procurement regime. In addition to the positive guides such as those noted above, they discuss various improper negotiations (pp 680 et seq.), such as: (a) Failure to give information to one or more offerors while providing it to other offerors. Examples cited include where the agency improperly suggested that one offeror use a more powerful computer that had recently come on the market without providing the same suggestion to other offeror, and where one competitor was informed the agency would accept performance that seemed to be out of compliance with the specifications, but not the others. Unfairness was also found where the agency
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answered questions of one offeror but disclosed answers with the corresponding questions to the other offerors ... and where the agency told only one offeror that it had decided to delete a significant portion of the work. (b) An agency must not mislead an offeror during discussions, such as, for instance suggesting concerns only to one offeror that induced the offeror to increase its services to address the concerns, thereby increasing its rates uncompetitively.
(3)
The FAR also gives guidance on how negotiations should and should not proceed. For instance, the FAR distinguishes between clarifications and communications and negotiations: (a) (1) Clarifications are limited exchanges, between the Government and offerors, that may occur when award without discussions is contemplated. (2) If award will be made without conducting discussions, offerors may be given the opportunity to clarify certain aspects of proposals . (Subpart 15-306(a).) Communications are exchanges, between the Government and offerors, after receipt of proposals, leading to establishment of the competitive range. (Subpart 15-306(b).) i) Compare this with permissible discussions in the Guam regulations (2 GAR 3114(i)): The head of the agency may conduct discussions with any offeror, the purpose of which is to determine in greater detail the offerors qualifications and explore with the offeror the scope and nature of the required services, the proposed method of performance, and the relative utility of alternate methods of approach. However, discussions shall not disclose any information derived from other offerors proposals. Also note 2 GAR 3115(e)(3)(B): the territorys stated requirements for offers submitted in proposals may be revised or clarified after proposals are submitted. This does not, presumably, mean the territory may
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(b)
ii)
revise or clarify its requirements in an unfair or noncompetitive fashion. (c) Negotiations are exchanges, in either a competitive or sole source environment, between the Government and offerors, that are undertaken with the intent of allowing the offeror to revise its proposal. These negotiations may include bargaining. Bargaining includes persuasion, alteration of assumptions and positions, give-and-take, and may apply to price, schedule, technical requirements, type of contract, or other terms of a proposed contract. When negotiations are conducted in a competitive acquisition, they take place after establishment of the competitive range and are called discussions. (Subpart 15-306(d).)
(4)
FAR Subpart 15-306(e) proscribes certain communications or conduct which would also seem, in principle, compatible with the policies of Guam procurement: Government personnel involved in the acquisition shall not engage in conduct that (a) (b) (1) Favors one offeror over another; (2) Reveals an offerors technical solution, including unique technology, innovative and unique uses of commercial items, or any information that would compromise an offerors intellectual property to another offeror; (3) Reveals an offerors price without that offerors permission. However, the contracting officer may inform an offeror that its price is considered by the Government to be too high, or too low, and reveal the results of the analysis supporting that conclusion. It is also permissible, at the Governments discretion, to indicate to all offerors the cost or price that the Governments price analysis, market research, and other reviews have identified as reasonable (41 U.S.C. 423(h)(1)(2)); (4) Reveals the names of individuals providing reference information about an offerors past performance; or (5) Knowingly furnishes source selection information
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(c)
(d)
(e)
in violation of 3.104 and 41 U.S.C. 423(h)(1)(2). b. The government must negotiate in good faith with each qualified offeror in turn and cannot move on to the next one until a higher qualified offeror has made its best and final offer and a determination has been made whether the offer is fair and reasonable. (1) See, In the Appeal of Great West Retirement Services, OPAPA-07-006, where the Public Auditor concluded the agency arbitrarily and capriciously ended negotiations with a best qualified offeror without a determination the best and final offer was not fair and reasonable.
c.
The award is given to the first best qualified offeror to conclude acceptable fair and reasonable price negotiations with the agency. Award of a contract [under an RFP] requires two elements: a determination that the offeror is the best qualified, and successful negotiations of fair and reasonable compensation. (Id.) Unless the solicitation states otherwise, proposals need not be unconditionally accepted by the government. This flexibility must be considered in determining whether reasons exist for rejecting all or any part of a proposal. (2 GAR 3115(e)(3(B).)
d.
12.
When the dust settles and an award is noticed, the agency must prepare a written memorandum, available for public inspection, including details of how the evaluation factors were applied to determine the best qualified offerors and the principal elements of the negotiations, including significant considerations relating to price and other terms of contract. (2 GAR 3114(m).) Each agency is required to submit annual reports to the CPO identifying every RFP issued in the preceding year. (2 GAR 3114(o).) What information available from an RFP? Unlike an IFB, the information available to other offerors and the public from an offerors proposal is circumscribed. a. The offers are not publically opened, but a Registrar of Proposals, containing the name of each offeror, the number of modification received, if any, and a description sufficient to identify the services offered shall be prepared and opened to public inspection after the award of the contract. (2 GAR 3114(h)(1).) Proposals of offerors who are not awarded the contract shall not be opened to public inspection. (Id.) The offer of the awardee,
13.
14.
b.
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therefore, is public record. c. Similar to IFBs, an offeror can request that trade secrets and other proprietary data not be disclosed, which is subject to the consent of the head of the procuring agency. (2 GAR 3114(h)(2).) The author takes the view that, under general trade secret laws, proprietary information which has been allowed to come into the public domain has lost its proprietary nature and cannot be sequestered or protected. Except for the specific proprietary and proposal information mentioned above and protectable under the regulations cited, all information intended to be included in a procurement record (see 5 GCA 5249; Article II.I.2) is a public record (5 GCA 5251). In discussions with the various offerors, the agency conducting the procurement shall not disclose any information derived from proposals or information contained in proposals until after award of the proposed contract has been made. (2 GAR 3114(i)(2); see, also, discussion of the timing of an award in the Article on Appeal Remedies below.) The author takes the view that this confidential proposal information loses its confidentiality if the confidentiality is waived, by deed or word, by the party otherwise due the confidentiality treatment. For instance, if a party publically discusses its own proposal information or allows any information contained in its proposal to come into the public domain, such part which has been made public is no longer confidential or protectable. The Public Auditor has found that these provisions prohibit the disclosure of any part of a proposal to another offeror until after an award has been made and a contract executed. (See, Guam Community Improvement Foundation, Decision for Protective Oder, supra, p 3.) (1) In both the GCIF Appeal and the GEFF Appeal, supra, the Public Auditor conducted an in camera review of the undisclosed offers in reaching her Decisions.
d.
e.
f.
g.
Note the discussion of 5 GCA 5485 at Article XXII.D below regarding the action and remedies that are available if procurement data is improperly withheld.
E.
Architectural, engineering and land surveying vs. construction services 1. There is a curiosity in the structure of the procurement law as regards construction services. Are they procured as professional services, so can escape the requirements of competitive sealed bids, or not?
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2.
The statutory definition of the professional services defined in 5 GCA 5121(a) does not specifically include architectural, engineering, surveying or construction services, but does include the broad other professionals description. 5 GCA 5216(a) also says services for architecture, engineering, construction, land surveying, environmental assessment and other such services shall be procured in accordance with Article 5 of this Chapter. The problem is Article 5 only deals with the alternative methods of construction management (5 GCA 5302) and does not specifically refer to methods of source selection. 5 GCA 5301 (the first section of Article 5) does, however, say that as used in this Chapter [sic: the entire Procurement Act constitutes the Chapter] Architect-Engineer and Land Surveying Serves are those professional services within the scope of the practice of architecture, professional engineering, or land surveying. It does not include construction within the ambit of such professional services. We must therefore look to the regulations. The regulations, however, again only refer to the RFP method of source selection for architecture, professional engineering, or land surveying services and not the more broadly described construction services. a. 2 GAR 5108(1) (within the regulations implementing the Article 5 mentioned in 5 GCA 5216(a)), specifies that [t]he provision of these Regulations applies to every procurement of services within the scope of the practice of architecture, professional engineering, or land surveying, again excluding any mention of construction services. 2 GAR 5108(2) and (3) elaborate, explaining, [i]It is the policy of this territory to: (a) give public notice of all requirements for architect-engineer and land surveying services; and (b) negotiate contracts for such services on the basis of demonstrated competence and qualification for the type of service required, and at fair and reasonable prices, by the RFP method (i.e., the method described in 2 GAR 3114, which implements 5 GCA 5216(a)). Thus, while the Procurement Act does not specifically dictate the use of a procurement method for the acquisition of these services, the regulation does, and in so doing pointedly excludes construction services from the ambit of that type of procurement.
3.
4.
It appears to be a sensible conclusion that when procuring the professional services of architecture, professional engineering or land surveying by themselves and not as a component of a construction contract, an RFP would be allowed. However, when procuring construction services for a thing to be constructed, which necessarily but incidentally involves such A&E and surveying professional services, competitive sealed bidding is required. a. Example: Bid security shall be required for all competitive sealed
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bidding for construction contracts when the price is estimated by the Director of Public Works to exceed $25,000. (2 GAR 5103(1).) 5. The conclusions above are also consistent with the Model Procurement Code, particularly the 2000 revisions to the Code and the 2002 Revisions to the Model Regulations, which extensively refined the project delivery methods (that is, the project management types) and the applicable procurement methods for each such type in its Article 5 counterpart to the Guam provisions (see, MPC 5-101 et seq.) a. For instance, MPC 5-201(2) notes that a design-bid-build project would proceed by securing the A&E services by the qualifications procurement method in an RFP, and the construction would be separately procured by competitive sealed bidding.
6.
The authors conclusion is that, as with the structure of the methods of source selection generally, competitive sealed bidding is the preferred method for construction projects. Procurement of specific A&E, surveying and other such professional services, by themselves and unattached to the construction services, is a specified exception to the preferred method, and should be procured by RFP. a. This simple construct was not, however, the analytical approach taken by the Public Auditor in her Decision in the GCIF Appeal, supra, OPA-PA-09-005. (1) That case involved an integrated design, build, finance, operate and maintain project delivery method, which by specific Legislative Act, required use of the RFP method of source selection. Under the authors simple construct, the solicitation being for the procurement of a facility and the A&E and other professional services being merely incidental to that end, competitive sealed bidding would be required. But, as mentioned in the discussion above, the Legislature specifically required an RFP method, so, under the unless other wise clause of 5 GCA 5210(a), that method was applicable. Nevertheless, while also noting the legislative mandate to use the RFP method , the Decision (pp. 6-8) undertook an extensive analysis of the professional services required of the solicitation to determine if the RFP process was applicable. The Decision concluded that because the RFPs scope of work requires the practice of architecture and engineering, the use of an RFP was authorized. The author believes this part of the analysis is flawed, and certainly unnecessary to
(2)
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the decisions result given the explicit legislation. It is not, in the authors opinion, sufficient that the scope of work in a solicitation may involve the practice of A&E, if the essential end result required is a constructed facility, as iterated above. If the critical analysis is as indicated by the Decision, the professional services exception will likely swallow the rule that construction projects ought to be solicited by the preferred competitive sealed bid method. (3) It might be noted that the MPC 5-202(6), 2000 Version, specifies that [c]ontracts for design-build-finance-operatemaintain shall be procured by competitive sealed proposals..., which, while broadly similar to the RFP process, has been repealed in Guam procurement law.
IX.
UNSOLICITED OFFERS A. An unsolicited offer is any offer other than one submitted in response to a solicitation. (5 GCA 5219.) This would seem to include any proposal, pitch or marketing of any item or service to GovGuam which includes price and other terms capable of being accepted, and likely to include any offer capable of being negotiated for acceptance. 1. Remembering that procurement law is intended to stylize and regularize the basic contract formation process, the author takes the view that an unsolicited offer must be one that is substantively equivalent to an offer in the usual contract law sense. That is, it is a communication (or series of communications) given by an offeror which empowers the offeree to simply say I accept and thereby create a contract. Thus, mere negotiation or supplying information or other such communications which would not ripen into a contract upon I accept should not trigger the unsolicited offer statute. But, as in contract formation issues broadly, this can be a grey area, a minefield of ambiguity, and vendors are advised to tread warily. Providing a brochure and price schedule could easily be taken to be a binding offer in any given factual circumstance.
B.
Old procurement law allowed unsolicited offers to be evaluated and processed for procurement as a sole source. This was negated and reversed in 1999 by PL 25:31:2, currently codified as 5 GCA 5219. Now, unsolicited offers must be processed by the competitive sealed bid procurement method. 1. All unsolicited offers considered as being desirable shall be subjected to the Competitive Sealed Bidding process under 5211. (5 GCA 5219(e).) This means that none of the alternative methods, such as small purchase or emergency procurement can be used for unsolicited offers,
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because they are identified in 5210(a), not in 5211 . 2. Note that the Regulations (2 GAR 3104) have not been updated to reflect the change in law, although, as was held in the Fleet Services, Inc. case, above, the change in law consequentially voids any inconsistent or unauthorized regulation.
C.
Notwithstanding any other provision of law, sole source procurement shall not be permissible in any procurement arising from an unsolicited offer. The criteria set forth in the [IFB] shall not require the inclusion of any proprietary item proposed in the unsolicited offer, and the proprietary character of an unsolicited offer or the inclusion of a proprietary item in the unsolicited offer shall not be used to favor the offer or any other bid, nor be a determining factor in awarding a bid. (5 GCA 5219(e).)
X.
SOLE SOURCE A. A contract may be awarded for a supply, service, or construction item without competition when ... there is only one source for the required supply, service or construction item. 5 GCA 5214.) Heads of purchasing agencies are authorized to determine whether a supply item ... shall be included as a part of, or procured separately from, any contract for construction. (2 GAR 3107.) Sole source, then, is not appropriate for construction contracts (only construction items). Also, it would be improper to use a sole source solicitation that includes, as part of the IFB, any item which does not qualify for sole source solicitation. Sole source is not determined by a product (supply, service or construction item) but by the governmental need which is required to be satisfied. 1. Sole source procurement is not permissible unless a requirement is available from only a single supplier. (2 GAR 3112(b).) A requirement for a particular proprietary item does not justify a sole source procurement if there is more than one potential bidder or offeror for that item. (Id.) In many cases there are alternative products available for meeting government needs/requirements. Solutions for the governments basic minimum needs are sought by means of specifications, which must be drafted to promote as much competition as is practicable (see, Article XIV). Thus, the mere availability of a unique product which satisfies a government need does not justify sole source if another product could also satisfy its minimum need.
B.
2.
3.
C.
In cases of reasonable doubt, competition should be solicited. Any request by a

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using agency that a procurement be restricted to one potential contractor shall be accompanied by an explanation as to why no other will be suitable or acceptable to meet the need. (Id.) D. The CPO, DPW Director or Head of the Purchasing Agency, or their designee above the level of Procurement Officer must determine in writing that there is only one source for the required supply, service or construction item. (5 GCA 5214.) 1. [2 GAR] 3112 also requires that any request by a using agency that a procurement be restricted to one potential contractor shall be accompanied by an explanation as to why no other will be suitable or acceptable to meet the need. (In the Appeal of L.P. Ganacias Enterprises, Inc., dba RadioCom, OPA-PA-06-003, p 9.) Pursuant to 5 GCA 5214 and 2 GAR 3112, GSA must make an independent assessment of the availability of potential suppliers.... There is no evidence of delegation to OHS or the Office of the Governor the authority to prepare its own specifications. Even if the authority had been delegated to the using agency, delegation of this duty to the sole source vendor is inappropriate and must be monitored by GSA to prevent specifications in violation of the 5265 and 5268 of the Guam Procurement Law.... In addition, 5262 and 5265 place the duty on the CPO to ensure that specifications requiring only one vendor, especially when written by that vendor, are monitored to ensure maximum competition. (RadioCom, id.) a. Guam GSA has issued a Circular, 09-003, effective June 5, 2009, requiring departments wishing to sole source select a particular item to make every effort to contact the manufacturer and inquire if there are other companies across the nation that provides the same product or services, so that the government is able to assure that the cost provided by the vendor or contractor is reasonable. This is a step in the right direction but falls short, to the extent this only requires an inquiry to the manufacturer, of obtaining the independent assessment required by the Public Auditors Decision.
2.
E.
A record of all contracts made under the sole source procurement (as well as emergency procurement) shall be maintained and a copy of such record shall be submitted to the Legislature annually and made available for public inspection. (2 GAR 3112(d).) 1. The author has asked for, and been given, copies of these reports from the Office of the Speaker of the Guam Legislature. They make for interesting reading (particularly the emergency procurements), but the author cautions, in his experience, there have historically been harmless errors made in classifying expenditures as emergency or sole source; he understands from
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discussions with the CPOs Office that, for instance, many times a purchase order is logged as a sole source, when, in fact, it is simply the annual renewal of a service or supply under a, say, five year contract, thus is rightfully a proper continuation of an existing contract (where 2 GAR 3121 multi-term, non-lease is applicable) or a lease (where 2 GAR 3119(j) is applicable. 2. The author has also been informed by the CPOs Office that it is changing its sole sourcing of certain maintenance and repair procurements. In the past, for instance, maintenance services were sole sourced to a dealer in a particular brand item. Realizing that there now exist on Guam other authorized or capable maintenance and repair service providers other than the authorized seller of the brand item, the author has been informed that it is now the policy of the CPO to competitively or otherwise procure such maintenance and repair services by appropriate source selection methods other than sole source. The author applauds all such actions undertaken to at least try to encourage competition in such matters.
F.
When conducting any sole source procurement, the procurement officer shall conduct negotiations, as appropriate, as to price, delivery and terms. (2 GAR 3112(c).) There ought to be a record of the negotiations in the file, if for no other reason than to verify compliance with this requirement. Examples of appropriate sole source circumstances are (2 GAR 3112(b)): 1. Where the compatibility of equipment, accessories, or replacement parts is the paramount consideration. Where a sole suppliers item is needed for trial use or testing. Where a sole suppliers item is to be procured for resale. Where public utility services are to be procured Where supplies are offered through bankruptcy or receivership sales, or other disposition at lower than prevailing market rates.
G.
2. 3. 4. 5.
H.
An example of when sole source procurement is not appropriate is in the Public Auditors Decision in In the Appeal of Town House Dept. Stores, Inc., dba Island Business Systems and Supplies [IBSS], OPA-PA-08-011, p 13: Here, the fact that XEROX provides copying services and equipment does not justify a sole source procurement determination because XEROX is not the only possible source of copier services and equipment. This method of procurement involves no competition and should be utilized only when justified and necessary .... (Official Comment, MPC 3-205.)
I.
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J.
Sole source procurement is required, when applicable, even to small purchases. (2 GAR 3111(b)(4); see Article XI below.) A variant on sole source procurement is a Requirements Contract. See discussion in Article XV.K, below. Under a bona fide requirements contract (a requirements contract is not a method of source selection), the government is obligated to purchase its requirements of specified goods or services during a specific time period from only one contractor, but the contractor must have been selected by an appropriate method of source selection.
K.
XI.
SMALL PURCHASE PROCEDURES A. Small purchase procedures exist to allow procurements of less than $15,000 for supplies or services and less than $50,000 for construction when other methods are not utilized, but if there is only one source for such procurement, the sole source method must be used. (2 GAR 3111(a), (3111(b)(4).) Procurement requirements shall not be artificially divided so as to fall within the small purchase limits. (5 GCA 5214.) For really small purchases, there are competition requirements for supplies and services in the $500 to $15,000 bracket (2 GAR 3111(c): 1. Insofar as is practicable, no less than three positive written quotations shall be solicited, recorded and placed in the procurement file, with award to the lowest responsible and responsive bidder. This file is a public record.
B.
C.
D.
Really, really small purchases of supplies and services under $500 can be conducted by operational procedures which provide for obtaining adequate and reasonable competition and for making records to properly account for funds and to facilitate auditing.... (2 GAR 3111(e).) Procurement of construction is subject to similar rules, with the two brackets being, (1) between $500 and $50,000, and (2) under $500. (2 GAR 3111(d).) Similar concepts are applied for accountants, physicians, lawyers, dentists, architects, engineers, or land surveyors. (2 GAR 3111(f).) See, General Services Agency, Small Purchases, Procurement Function, Performance Audit, October 1, 2001 through June 30, 2003, OPA Report No. 04-05, March 2004, http://www.guamopa.org/docs/OPA0405.pdf Request for Quotation (RFQ) 1. Requests for Quotations are only specifically mentioned in respect of small
E.
F.
G.
H.
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purchases ( 3111(c)(1): no less than three positive written quotations from businesses shall be solicited) and emergency procurements ( 3113: the procurement agent must solicit at least three informal price quotations). 2. Except in those limited circumstances, RFQs are not authorized methods of source selection.
I.
Blanket Purchase Agreements (BPAs) (2 GAR 3112.1): 1. A BPA is a purchase agreement to establish a charge account to acquire and indefinite quantity or type of supplies or services. (2 GAR 3112.11(a).) It is thus contemplated that it is intended where there would otherwise be numerous purchase orders for a broad class of goods (e.g., hardware). Also contemplated are BPAs made with dependable firms with proven prices which are considerably lower than other firms dealing in the same commodities ( 3112.12(d)), but they should be contacted to secure maximum discounts. ( 31121.12(f). Individual purchases under BPAs shall not exceed $15,000 for supplies or services or $50,000 for construction. ( 3112.13(b).) The use of a BPA does not authorize purchases that are not otherwise authorized by law or regulation. ( 3112.13(a).) The existence of a BPA does not justify purchasing from only one source. Wherever possible, the purchasing officer must provide for equal distribution of the blanket purchase to at least three separate vendors. ( 3122.13(c).) Remember, a BPA is essentially an open account with a vendor. The government is required to spread the business around accounts and not favor any one (equal distribution). If there is an insufficient number of BPAs to select from, the purchasing officer is directed to go out and solicit more competition and establish more BPAs. ( 3112.13(d).) All competitive sources should be given an equal opportunity to furnish supplies or services under BPAs. Therefore, if not impossible, then to the extent practical, BPAs for items of the same type should be placed concurrently with at least three separate suppliers to assure equal opportunity. (3112.12(d).) See, General Services Agency, Blanket Purchase Agreements, Procurement Function, Performance Audit, October 1, 2001 through June 30, 2003, OPA Report No. 04-08, July 2004, http://www.guamopa.org/docs/OPA0408.pdf
2.
3.
4.
5.
6.
7.
XII.
EMERGENCY PROCUREMENT (5 GCA 5215)

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A.
Requires an existing threat to public health, welfare, or safety under emergency conditions. There must be a written determination of the basis for the emergency, made under penalty of perjury by the CPO, Director DPW or Head of the Purchasing Agency, unless there is a Governors declaration of emergency by Executive Order which specifically states that emergency procurement may be resorted to for the purposes of the order. Where there is no Governors emergency Executive Order, as a condition of any procurement award, the certified determination must be given to the Governor and Speaker; and, the Governor must approve in writing all authorizations for emergency procurement. Emergency does not include management failure. Emergency means a condition 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, and which cannot be addressed by other procurement methods of source selection. (5 GCA 5030(x); 2 GAR 1106(47).) 1. One might question the repeated uses of declarations of emergency to skirt normal procurement in circumstances due to poor management leading to conditions that were clearly foreseen or foreseeable, e.g., Executive Orders 2008-16 (GPSS) and 2008-17 (DPW). For instance, the author takes the view that under other procurement methods of source selection it is within the power of the government to seek a lifting of the automatic stay (see Article XVII.D on lifting the automatic stay, below). Thus, it should be a requirement, in the nature of exhaustion of administrative remedies, that the government seek to lift an automatic stay before rushing off to get an emergency declaration to continue to procure goods or services in the face of a bid protest.
B.
C.
Emergency procurements shall be made with such competition as is practicable under the circumstances. The procurement agent must solicit at least three (3) informal price quotations and, if time allows, must give notice to all contractors from any qualified bid list. Award goes to the firm with the best offer, as determined by evaluating cost and delivery time. (Query: does this take issues of bidder responsibility out of the equation?) A written determination of the basis for the selection of the contractor shall be included in the contract file. LIMITED TO 30 DAY SUPPLY: No emergency procurement or combination of emergency procurements may be made for an amount of goods or supplies (which does not speak to construction) greater than the amount of such goods and supplies which is necessary to meet an emergency for the thirty (30) day period immediately following the procurement. 1. It is not an emergency if another source selection method is available. One
D.
E.
F.
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reason for the 30 day limitation is to stay within the notional definition of an imminent threat unforeseeable by prudent management. Beyond that it is, or should be, a manageable event. But equally as important to managing the emergency, the 30 days also is intended to provide sufficient time to issue an IFB or RFP for supplies and services in the normal methods of source selection for any ongoing complications or consequences of the emergency. Emergency means a condition ... which cannot be addressed by other procurement methods of source selection." (5 GCA 5030(x); 2 GAR 1106(47).) If there is reasonable time to use another method of source selection to obtain needed supplies or services, it is not an emergency. G. The law contemplated that the Policy Office would draft regulations which further define emergency conditions, but they have not done so: other than the definition of emergency noted above which simply parrots the law, the only regulation on the subject, 2 GAR 3113, refers to a sub 3113(b), but it does not appear in the Guam Compiler of Laws regulations. Recall that the Policy Office, not the Governor, has the power to adopt procurement regulations (see Article III.B.3). Emergency procurement is a specifically authorized method of source selection (5 GCA 5210(a)), and its specific requirements of law and regulation must be followed; the Governor has not been granted any plenary power to make up emergency procurement procedures, nor to enter into any contract for the expenditure of public funds, with limited exceptions, except as authorized by the Procurement Act (5 GCA 5004(b)). Thus, if any emergency procurement is conducted contrary to the Procurement Act and Regulations applicable to that method of source selection, any prospective bidder may protest the solicitation (5 GCA 5425(a)). In an emergency under [2 GAR] 3113 (Emergency Procurement), any necessary specifications may be utilized by the purchasing or using agency without regard to the provisions of this Chapter [4 - Specifications]. (2 GAR 4103(a)(2)(c).) The CPO must deliver an annual report to the Legislature itemizing all emergency procurements, together with all sole source procurements, as discussed above in Article X.E dealing with Sole Source procurements.
H.
I.
J.
XIII.
FEDERAL SUPPLY SCHEDULE PURCHASES must adhere to specified methods of source selection available under the Guam procurement law A. For its own purposes, the US Federal Government has established a specialized facility that allows government purchasers, pursuant to processes specified in the FARs, Subpart 8.4 http://www.acquisition.gov/far/current/html/Subpart%208_4.html, to directly purchase certain supplies and services directly from pre-approved private contractors/vendors. This facility is known as the GSA Supply Schedule or FSSP
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(Federal Supply Schedule Program). B. A review of this program is beyond the scope of this paper, but see http://www.gsa.gov/Portal/gsa/ep/contentView.do?contentType=GSA_OVERVIEW& contentId=8106 . GSA Schedules offer customers direct delivery of millions of state-of-the-art, high-quality commercial supplies and services at volume discount pricing. The FSSP is analogous to buying from an online catalogue of supplies and services, each offered by different supply contractors at varying prices and upon varying terms, depending on the contractor chosen. The Federal government has authorized GovGuam to access the Supply Schedule contractors, which is a discretionary privilege and not a right. To be an approved Supply Schedule contractor, the Federal government requires certain standards and generally extracts the best customer price from the contractors with its purchasing muscle. This has the potential to provide GovGuam cost savings on Supply Schedule supplies and services. 1. Most US Federal agencies can directly access the schedule contractors and directly purchase scheduled supplies and services without normal competitive procedures, although the applicable FARs do have their own competitive requirements for such purchases. Federal regulations require GovGuam to purchase from Supply Schedules according to Guam law. The FARs require all ordering activities such as GovGuam to make their purchases consistent with [their own] statutory and regulatory requirements applicable to the acquisition of the supply or service (FAR Subpart 8.404(c)(3).)
C.
2.
D.
The Guam Procurement Act puts a limit on the privilege granted by the Federal government to GovGuam to access the FSSP. 1. The [Guam] General Services Agency shall procure supplies from the United States when the cost to the [Guam] General Services Agency is less by ten percent (10%) than from other contractors. (5 GCA 5122) The intent and purpose of this clause is vague and without any extant explanation. Lore has it that the provision is intended to provide a local preference for other bidders, even though there is a separate express local preference provision, discussed in Article II.L above, and even though there is no mention at all of the word local in the provision. a. GSA adopted, and the Attorney General approved, regulations allowing GSA to purchase from the Federal Supply Schedule so long as it sought price comparisons from at least three local vendors in order to calculate the 10% differential. The regulations, and, in part, the opinion (Legal Memorandum, Legality of Purchasing through Federal GSA Contracts, GSA 07-1084, June 16, 2008) were
2.
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critiqued by the author in the Notice of Appeal, and subsequently disapproved by the Public Auditor in her Decision in In the Appeal of Town House Dept. Stores, Inc. dba Island Business Systems and Supplies [IBSS vs GSA], OPA-PA-08-012. b. In fact, the specific local preference provision contemplates a greater, 15%, differential, which must also be considered if the FSSP contractor is from off-island. The intent of 5122 cannot be to create a local preference right if a greater right is more specifically created by other statute.
3.
Some have argued 5122 implies authority and direction to Guam to purchase from Federal Supply Schedule Program, but, of course, only the Federal government can authorize who can purchase from its programs. This argument is based on a restrictive reading of the dependent clause shall procure supplies, without reference to clearly conditional when clause and the 10% limitation it expresses. 5122 refers to contractors, but Guam procurement law refers to contractor only when discussing a post-award party. Prior to award, that is, at the stage where a vendor is being considered as a supplier, the procurement laws refer to bidders and offerors, or, and only when the lowest responsive bidder has been selected, a prospective contractor. Considering the historical context of the provision as well as the particular language used in it compared to the language used elsewhere in the Procurement Act, the author surmises that experience would have revealed that simply buying from one contractor on the Schedule does not assure the lowest price offered by all Schedule contractors. The author concludes that 5122 is intended simply to make sure that, when GovGuam buys from the Federal Supply Schedule, it must consider all the supply items available from all the Schedule contractors, and not buy from a more expensive contractor if there is another contractor on the Schedule offering a similar item for at least a 10% lower price.
4.
5.
6.
E.
Lore has had it that the FSSP was a way to bypass the bid process. (See, (In the Appeal of Town House Dept. Stores, Inc. dba Island Business Systems and Supplies [IBSS vs. GPSS], OPA-PA-08-011, p 10.) Guam GSA has long purchased directly from the Federal Supply Schedule contractors according to its own procedures, and the Attorney General has, through more than one opinion, long provided legal cover for GSA to do so, saying specifically in its Legal Memorandum dated June 16, 2008 (Purchasing from GSA Federal Supply Schedule Procedure) that 5122 authorized another method of source selection beyond those specified in 5 GCA 5210(a). The Memorandum also concluded that Guam GSA had the authority to adopt procurement procedures to conduct purchases directly from the FSSP without going through the other express methods of source selection specified in the
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Procurement Act.. F. The Public Auditor has since ruled that 5122 does not provide any exception to the specific methods of source selection specified in 5210(a) and those methods, such as competitive sealed bid, must be used when making any purchase from the Federal Supply Schedule contractors. She also ruled that GSA does not have the authority to adopt any other method of source selection. (Town House Dept. Stores, Inc. dba Island Business Systems and Supplies [IBSS vs GSA], OPA-PA-08012.) Guam GSA has, by GSA Circular No. 2009-01, effective January 9, 2009, directed any using agency which wishes to purchase from the FSSP Supply Schedule to attach copies from the Contract or Schedule of a least three (3) different contractors of the same type of equipment or supply from the Contract or Schedule. ... This office will no longer procure directly through the U.S. GSA Contract or Schedule, by using the informal process (Request for Quotation) to calculate the 10% requirement pursuant to 5 GCA 5122.... The GSA will procure through the formal process which is to issue an Invitation for Bid prior to procuring through the U.S. GSA Contract or Schedule. The bid price will be utilized to calculate the 10% requirement.... The point the author found most agreeable was the CPOs embrace of the competition policy goal: This procedure has been issued to improve the process of competition on a fair level playing field prior to using the U.S. GSA Contract or Schedule. Note that Guam GSAs web page lists only a few of its Circulars, not including this one. 1. This requirement to identify three Schedule Contractors is consistent with the authors interpretation of 5122 noted above, that the intent of that section is to make sure there is no other Contractor on the schedule who could offer the same item for a significantly (10%) lower price. It would appear, further, that this Circular directive envisages that even after that Scheduled Contractor selection process, the lowest bid will be further tested by a competitive method of source selection (and, indeed, that was confirmed to the author in discussion with a GSA manager).
G.
XIV.
SPECIFICATIONS A. Specifications Are the Bedrock of Procurement: The purpose of a specification is to serve as a basis for obtaining a supply, service, or construction item adequate and suitable for the territorys needs in a cost effective manner.... Specifications shall be drafted with the objective of clearly describing the territorys requirements (2 GAR 4102(a)(1).) Thus, the most critical and first step in planning and soliciting is to get the specifications right. 1. For a guide to effective needs assessment, see Part 11.000 of the US governments FAR.
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B.
Competition is the Bedrock of Specifications: It is the policy of the territory that specifications permit maximum practicable competition consistent with this purpose. (2 GAR 4102(a)(1).) All specifications shall seek to promote overall economy for the purposes intended and encourage competition in satisfying the Territorys needs, and shall not be unduly restrictive. (5 GCA 5265; 2 GAR 4106.) 1. In Appeal of Admiral Service, Inc., MSBCA No. 1341 Sep 15, 1987, the Appeals Board, noting the tension between the policies of promoting competition and meeting minimum needs, and without any reference to the de novo standard of review, said (at p. 2), [t]he primary issue is whether the specifications as written unreasonably restrict competition. Under Maryland procurement law, the procurement officer has broad discretion in drafting specifications to meet the States minimum requirements when weighed against the State policy of fostering the maximum practicable competition. And we will not substitute our judgment for that of the procuring agency in absence of a clear showing that it acted unreasonably or otherwise abused its discretion.... a. This case involved the availability of two different methods of providing window cleaning services for three buildings, with the specifications preferring one method over the other. It was noted that the appellant had the opportunity to obtain equipment need to provide the chosen method, but at a cost that possibly made his product more expensive for two of the three buildings. The rationale given by the agency for its choice of the one method was disputed by the appellant. The Board said (at p. 3) [w]hile the evidence presented by Appellant is convincing, there is no clear showing that [the agency] acted unreasonably in its exercise of its judgment to require [one method over the other]. The Board observed that this was an instance where industry standards and practices were changing, saying that new methods should not be rejected out of hand, in a hint that it considered this to be a close case. It added (id.), the agencys decision may not be an entirely correct assumption, and we might conclude differently were it our responsibility to make this technical judgment in the first instance. In this case, the Appeals Board said the technical specifications would stand, but only because the appellant failed to show the specifications unreasonably restricted competition (at p. 4), recalling that the appellant did have the ability to obtain equipment to compete on the specifications but at a higher cost. Thus, this was not a case of unduly restricted competition, it was a case of the agency preferring a more expensive product, and in this case the Appeals Board did not disturb the conclusion. Perhaps, under a
b.
c.
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more critical de novo review, or where the economics were truly so lopsided as to suggest the minimum needs determination was not a reasonable one, the decision would have gone differently. C. AMENDING specifications. The principle applicable to amending contracts (discussed in Article IV.F, above) would also apply to any amendment of specifications or other terms of an IFB or RFP. That is, if the specification amendment is beyond the scope of the original solicitation, it is improper and must be re-solicited, or the amended part excised and put out to separate solicitation. This principle is underscored by the requirement, in the evaluation phase of multistep competitive sealed bidding, that when a contemplated amendment will significantly change the nature of the procurement, the Invitation for Bids shall be cancelled.... (2 GAR 3109(t)(2).) 1. In National Elevator Company, MSBCA No. 1266 Mar 7, 1983, the specifications required contract work to be limited to a list of personnel submitted with the bid. This was protested. Trying to deflect the importance of this specification, the government agency argued it was a mere formality that as a practical matter could be subject to exception if circumstances arose during the course of performance. The Appeals Board ruled [t]his would be contrary to the requirement that bidders are entitled to bid on an equal basis; they have a right to rely on the solicitations wording regarding the scope of competition for award.
D.
Unless the context requires otherwise, the terms specification and purchase description are used interchangeably throughout these Regulations. (2 GAR 4101(4).) Purchase description, simply defined (see 2 GAR 1106(26)), means the words used in a solicitation to describe the supplies. MINIMUM needs: The specifications in the IFB shall include only the essential physical characteristics and functions required to meet the Territorys minimum needs. (5 GCA 5268(a).) Bells and whistles, status symbols, ego trips, and the 95% of the functions you never use are non-minimalist extravagances that should not be part of specifications. 1. Experience shows that procurement planningin particular, needs assessment and definition of technical specificationsand the delivery phase are particularly exposed to corruption. If the process is not controlled and properly regulated, a need or requirement can be created arbitrarily, and substandard products or services can be delivered, thus providing margins for kickbacks. (Public Procurement Asia/Pacific, supra, Part 1.1.) You can't always get what you want But if you try sometimes you might find You get what you need ( The Rolling Stones). In Appeal of National Elevator Company, No. 1266 Mar 7, supra, the
E.
2.
3.
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specifications required a bidder to list all of its personnel and to restrict its contracted work to those employees. The Appellant argued this unduly restricted competition. The government argued it needed assurance of a ready workforce to meet the 24 hour maintenance obligations of the contract. Without discussing the application of the ability to obtain criteria for a determination of responsibility, the Appeals Board upheld the appellants argument that the specifications were unduly restrictive and therefore could not meet the States minimum needs. (See, pp. 6-8.) F. Unduly RESTRICTIVE: All specifications shall seek to promote overall economy and encourage competition in satisfying, not exceeding, the territorys needs, and shall not be unduly restrictive. (2 GAR 4106) 1. In Appeal of Xerox Corporation, MSBCA No. 1111, Apr 25, 1983, the appellant sought to restrict bid specifications in its protest. It argued that the government solicitation should not allow agencies to acquire machines on an as needed bases, as this would be fiscally disadvantageous since it would require unit pricing and not volume discounting, and that specifications with broad volume band sizes for different machines would encourage overpricing. The Appeals Board (at p. 6) ruled that there was no credible evidence submitted that the limitations complained of were unnecessarily restrictive. ICMAs Service Contracting text, supra, observes, one of [t]he most common causes of protests are restrictive requirements for bidder qualification or experience.... A protest can be expected if the bid document contains restrictive requirements that prevent all but a few bidders from responding. The best protection against such protests is, first, clear and reasonable requirements, and second, a defensible, written justification for requirements that might appear restrictive.... To ensure that requirements are reaonable, avoid arbitrary cutoff points.
2.
G.
It is the general policy of this territory to procure standard commercial products whenever practicable. In developing specifications, accepted commercial standards shall be used and unique requirements shall be avoided to the extent practicable. (2 GAR 4102(a)(3)) Non-proprietary: All specifications shall be written in such manner as to describe the requirements to be met without having the effect of exclusively requiring a proprietary supply item, or procurement from a sole source, unless no other manner of description will suffice, and in that event, a written determination shall be made that it is not practicable to use a less descriptive specification. (2 GAR 4106(a).) Purchase descriptions shall not specify a product having features which are peculiar to the products of one manufacturer unless it has been determined in writing by the Director of the using agency that those particular features are essential and
H.
I.
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specifying the reason that similar products lacking those features would not meet minimum requirements for the item. (5 GCA 5268(b).) J. Purchase descriptions shall describe the salient technical requirements or desired performance characteristics of supplies to be procured without including restrictions which do not significantly affect the requirements or characteristics. (5 GCA 5268(c).) BRAND NAMES: Since use of a brand name specification is restrictive, it may be used only when the purchasing officer makes a written determination that only the identified brand name item will satisfy the territorys needs. The government must seek to identify multiple, competitive sources of brand name items, failing which it must utilize the sole source method of source selection. ( 4103(b)(2)(c)(ii).) 1. See, L.P. Ganacias, CV 1787-00, supra, at page 22, where the Court was observed the agency undertook no evaluation which lead to the conclusion that only Motorola pagers would meet the needs of the agency, and there was no written documentation prepared which would support a conclusion that no other brand of pager would suffice. The Court stated, while GIAA may have had legitimate reasons for focusing its IFB on the Motorala brand pagers, there is absolutely no documentation to support such decision.... [T]his violation by Defendant GIAA is duly noted by the Court and the Defendant is placed on notice that any and all future IFBs must comply with Guams procurement regulations. See, In the Appeal of IBSS [vs GPSS], supra, OPA-PA-08-011, at p 13, wherein the Public Auditor held procurement of XEROX brand copiers could not be justified under a brand name specification.
K.
2.
L.
Brand Name OR EQUAL: Use of brand name or equal specifications ( 4103(b)(2)(b)) 1. The procurement officer must make the written determination that a. b. no specification for a common or general use item is available, and time does not permit the preparation of another form of specification (not including a brand name specification) and either the nature of the product or the territory's requirements makes use of a brand name or equal specification suitable or use of the brand name or equal specification is in the territory's best interest.
c.
d.
2.
The specifications must designate three or as many different brands as are practicable as "or equal" references.
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3.
The specifications shall include a description of the particular design, functional or performance characteristics of the brand name product which are required, unless such essential characteristics of the brand name product are commonly known in the trade or industry. The brand name or equal specification must explain that the use of a brand name is for the purpose of describing the standard of quality, performance and characteristics desired and is not intended to limit or restrict competition to the brand name product.
4.
M.
The Who and How of specification preparation and use: 1. Specifications contained in any invitation for bids or proposals for the procurement of supplies shall identify the person responsible for drafting the specifications and any persons, technical literature or manufacturers brochures relied upon by the responsible person drafting the specifications. (5 GCA 5267.) a. In the underlying Protest which was the subject of a Petition to Compel ..., OPA-PA-09-011, the Protestor argued the specifications were defective because they failed to specifically identify the person and other matters apparently required by 5267. (See, protest letter attached to Petition to Compel ....) The CPO/GSA denied the objection, saying [w]e believed that our action of having the agency or department confirming the specifications does identify the person or persons responsible for drafting the specifications and any persons, technical literature or manufacturers brochures [relied] upon by the responsible person in drafting the specifications. The author, who raised the objection in that matter, is not convinced by the response, but that matter was withdrawn and dismissed for other reasons and the dispute remains to be decided by the Public Auditor on another day.
2.
The CPO shall prepare, issue, revise, maintain and monitor the use of specifications for the supplies and services required by the Territory. (5 GCA 5262(a).) a. The CPO should ensure that restrictive ad specifications that favor one bidder over another are not used, and that any specifications provided [by the using agency] are properly screened and amended when necessary to prevent such restrictive specifications from appearing in future IFBs. ( In the Appeal of Guam Publications, Inc., OPA-PA-08-007, p 13.) The CPO must independently monitor Specifications used in sole source procurements. (In the Appeal of RadioCom, supra, p 10.)
b.
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3.
The Director DPW shall prepare, issue, revise, maintain and monitor the use of specifications for construction required by the Territory.. (5 GCA 5262(b).) The authorities above suggest that, except in the limited cases below, nongovernmental persons are not authorized to prepare specifications for government solicitations. a. In Appeal of Xerox Corporation, MSBCA No. 1111, supra, the Appeals Board said (at p. 6), [t]he drafting of specifications is primarily a function of the States procurement agencies....
4.
5.
The duty of the CPO and Director DPW to prepare and utilize specifications may be delegated to the Using Agencies. (2 GAR 4103(a)(1).) Special circumstances for specification preparation or use: a. Third party contracts to prepare specifications: (1) A contract to prepare specifications for territory use in procurement of supples or services (2 GAR 4103(a)(2)(a)) may be entered into if: (a) there will be no substantial conflict of interest involved or it is otherwise in the best interest of the territory, as certified in a written determination made by the CPO, Director DPW or Head of the Agency, and, and so long as such officer retains the authority to finally approve the specifications.
6.
(b)
(c)
(2)
Similarly, the Director DPW can authorize third party contracting for specification preparation for construction. (2 GAR 4103(a)(2)(b).)
b.
In emergencies (see Article XII on Emergency Procurement above; 2 GAR 3113), any necessary specifications may be utilized. (2 GAR 4103(a)(2)(c).) For Small Purchases (see Article XI on Small Purchase method above; 2 GAR 3111), purchasing and using agencies are generally authorized to prepare specifications for such purchases (Id.).
c.
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7.
Procedures for Development of Specifications, Generally (including preparation by the CPO, Director DPW , Heads of Agencies, third parties and all others; 2 GAR 4103(b)(1)): a. Specifications may provide for alternate descriptions where two or more design, functional, or performance criteria will satisfactorily meet the territorys requirements. (Sub (b)) To the extent feasible, a specification shall not include any solicitation or contract term or condition such as a requirement for time or place of bid opening, time of delivery, payment, liquidated damages, or qualification of bidders. (Sub (c))
b.
8.
Preparation and use of specifications for Common or General Use Items (2 GAR 4103(b)(2)(a)): a. The author is unaware of any application of this provision, notwithstanding having reviewed numerous solicitations with widely varying specifications for supposedly standard, commercial copiers, but considers it to be a good idea if implemented properly, so includes it here. Common or General Use specifications are intended for: (1) A supply, service, or construction item used in common by several using agencies or used repeatedly by only one when (a) (b) commercially produced or provided, and the characteristic of it is relatively stable while the frequency or volume of procurement is significant.
b.
(2)
When the territorys recurring needs require uniquely designed or specially produced items.
c.
The drafter of the specification shall provide the using agency(ies) and a reasonable number of manufacturers and suppliers an opportunity to comment on the draft specification. Final approval or cancellation of the specification lies only with the CPO, the Director DPW or the Head of a Purchasing or Using Agency. Revisions and clarifications of specifications for common or general use items requires similar review and approval. The provision for common or general specifications is identified in
d.
e.
f.
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the regulation as special additional procedures, implying, if the implication was not already clear, that all other applicable rules regarding the policy, form and content of specifications apply. (See 2 GAR 4107 (and to similar effect 5 GCA 5266): The requirements of this Chapter regarding the purposes and nonrestrictiveness of specifications shall apply to all specifications, including, but not limited to, those prepared by architects, engineers, designers, and draftsmen for public contracts.)
XV.
VARIOUS CONTRACT TYPES, AND THEIR REQUIREMENTS FOR USE A. We have been discussing the various methods of source selection (procurement types) and the specifications that determine what it is the government requires from a vendor/contractor. Here we differentiate the types of contracts the government can enter into. These types are generally differentiated by pricing (e.g., fixed price, time and materials), quantity (definite, requirements), financing terms (lease, option), time of performance (indeterminate, multi-term) and the like. 1. Allowable contract clauses and their administration, modification and termination are generally governed by regulations in 2 GAR Chapt. 6, 6101 et seq.
B.
The government agencies have only restricted power as to the form and substance of certain material general contract terms. Note that while there is flexibility in selecting amongst contract types and clauses, different contract types have conditions and limitations for their usage. Contract types and clauses can only be used as appropriate and as specified. The author has noted that many of the standard clauses found in typical Guam contract General Terms and Conditions fail to meet the requirements of these regulations. He concludes such clauses are a nullity because they are not authorized by the regulations. 1. Certain of the contract clauses allowed by the regulations are particularly described and cannot be varied by the government unless both substantive and procedural criteria are followed. a. Without going into a full discussion of the various contract clauses allowed by the regulations, topics include change orders, price adjustments, stop work orders, termination for default or convenience, changes in quantity, liquidated damages and the like.
2.
If the clauses set forth in this Chapter are utilized, they may be varied for use in a particular contract when, pursuant to the provisions of 5 GCA 5350(d) (Contract Clauses and Their Administration, Modification of Clauses) of the Guam Procurement Act, the Chief Procurement Officer or the head of a Purchasing Agency makes a written determination describing the circumstances justifying the variation or variations. Any material
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variation from these clauses shall be described in the solicitation documents in substantially the following form: Clause No. _____ , entitled _______________ is not a part of the general terms and conditions of this contract and has been replaced by Special Clause No. ___________ , entitled _________. (2 GAR 6102(2).) C. Remember also, NO form of contract is allowed if procured improperly. First, there must be the selection and use of an appropriate method of source selection. Then there must be a selection of the appropriate type of contract in the solicitation. In many cases, the same considerations that determine the method of source selection influence also the contract type. This is not a thorough review of the various contracts types or their requirements, as it would detract from the primary focus of this paper, to introduce the procurement process. For a more in-depth study, refer to 2 GAR 3119, and to 2 GAR 5102 et seq. for contract considerations for determining different methods of management for construction contracts. Note, also, that the regulations also deal particularly with clauses within contracts, and that such clauses are mainly not discussed in this paper. (See, e.g., 2 GAR 5106 and 6101.) Subject to the limitations of this Section, any type of contract which will promote the best interests of the Territory may be used. (5 GCA 5235.) 1. 2. A cost-plus-a-percentage-of-cost contract is prohibited. (Id.) A cost-reimbursement contract requires a determination it is likely to be less costly than any other type. (Id.) Except for a fixed-price contract, no contract type shall be used unless there is a determination that the contractors accounting system permits timely and adequate collection and allocation of cost data. (5 GCA 5236.)
D.
E.
F.
3.
G.
Policy Regarding Selection of Contract Types (2 GAR 3119(c): 1. The objective when selecting a contact type is to obtain the best value in needed supplies, services, or construction in the time required and at the lowest cost or price to the territory. The selection of an appropriate contract type depends on factors such as the nature of supplies, services, or construction to be procured, the uncertainties which may be involved in contract performance, and the extent to which [either] the territory or the contractor is to assume the risk of the cost of performance of the contract.
2.
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H.
Multi-term contracts: A contract may be entered into for any period of time deemed to be in the best interests of the Territory by encouraging effective competition or otherwise promoting economies in territory procurement provided (5 GCA 5237). 1. The statutory conditions for multi-term contracts are: a. the term of the contract and any conditions of renewal or extension are included in the solicitation. funds are available only for the first fiscal period at the time of contracting: (1) continuance of payment and performance obligations for succeeding fiscal periods are subject to further availability and appropriation of funds; if funds are not available, the contract is to be cancelled and the contractor reimbursed only for the reasonable value of any non-recurring costs incurred but not amortized in the original contract price for the goods delivered.
b.
(2)
c.
a determination is made that the Territorys estimated requirements will be reasonably firm and continuing. the contract will serve the best interests of the Territory by encouraging effective competition or otherwise promoting economies.
d.
2.
By regulation, a multi-term contract is a definite quantity form of contract for the supply, or, a contract for long term services. (2 GAR 3121(d).) Generally a contract for supplies or services may be entered into for any period of time deemed to be in the best interests of the Government of Guam provided the term of the contract and conditions of renewal or extension, if any, are included in the solicitation and funds are available for the first fiscal period at the time of contracting. 5 G.C.A. 5237(a). However, prior to using a multi-year contract, it must be determined in writing that such a contract will serve the best interest of the Government of Guam by encouraging effective competition or otherwise promoting economies in government procurement. 5 G.C.A. 5237(b). There is no such determination in the procurement record nor can one be made in this case. (In the Appeal of Town House Department Stores, Inc. dba Island Business Systems and Supplies, OPA-PA-08-011, Decision p. 14.) The objective of the multi-term contract is to promote economy and
3.
4.
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efficiency in procurement by obtaining the benefits of sustained volume productions and consequent low prices, and by increasing competitive participation in procurement intended for multi-term contracting. (2 GAR 3121(b).) a. The MPC makes it clear that this form of contract is particularly intended where the need is to attract offers from large companies whose capacities for production limit them to large production runs, so that the government can procure larger quantities and obtain the benefits of volume discounts. Commentary No. 1 to MPC 3-503 adds, Multi-year procurements should attract more competitors to submit bids or offers for the larger contract awards and thereby provide the jurisdiction with the benefits of increased competition.
5.
Multi-term contracts, more specifically (2 GAR 3121(a)): a. Are appropriate and limited (sub 3121(d)): (1) to obtain uninterrupted services or definite quantities of supply extending over more than one fiscal period (a) where the performance of such services involves high start-up costs, or where a changeover of service contractors involves high phase-in/phase-out costs during a transition period.
(b)
b.
Are subject to very specific conditions of use and procedure too complex (and rare for Guam) to mention here. (See 2 GAR 3121(d) and (e).) Are not applicable to any other contract type, including but not limited to contracts for construction or leases (of all property, real and otherwise). ( 3121(c).) (1) Leases are not multi-term contracts because, first 3121(c) says they are not, second, because in a multi-term contract renewal from year to year must be made subject to appropriation and availability of funds (( 3121(a)), and because leases are for an unconditional term of use (2 GAR (j)(1)).
c.
I.
Fixed-Price (2 GAR 3119(d).) A fixed-price contract places responsibility on the contractor for the delivery of the product or the complete performance of the services or construction in accordance with the contract terms at a price that may be firm or may be subject to contractually specified adjustments. The fixed-price is
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appropriate for use when the extent and type of work necessary to meet territorial requirements can be reasonably specified and the cost can be reasonably estimated. a. A fixed-price type of contract is the only type of contract that can be used in competitive sealed bidding. (Sub 3119(d)(1).) When, under a contractually specified adjustment, the contract permits unilateral action by the contractor to bring about the condition under which a price increase may occur, the contract shall reserve to the territory the right to reject the price increase and terminate the contract, without liability as to any future performance. (Sub 3119(d)(3)(B).)
b.
J.
Indefinite Quantity (2 GAR 3119(i)(2): An indefinite quantity contract is used to acquire an indefinite amount of supplies or services. A requirements contract (see below) is a form of indefinite quantity contract. Indefinite quantity contracts are contrasted with definite quantity contracts which provide for delivery of a specified quantity at specified times or at a single time when ordered. (Sub 3119(i)(1).) Both indefinite and definite quantity contracts are fixed-price contracts; in the case of indefinite quantities, the price is a fixed unit price. 1. Generally, an approximate quantity is stated in the solicitation. It may specify a minimum or maximum amount. (Id.) a. [O]ne of the primary purposes of the procurement code is to maximize to the fullest extent practicable the purchasing value of public funds.. 5 G.C.A. 5001(b)(5). Here, GSA could improve the purchasing value for these ads by specifying at least a minium.... Further, future procurements for these ads will benefit by not using an indefinite quantify [sic; quantity] contract.... (Guam Publications, supra, (at p 12).) (1) One of the consequences of failing to specify an approximate quantity, or at least a minimum, is that it then becomes impossible to estimate whether a bid bond is required, and, if so, in what amount. (See Article V.B.2.b and the Fleet Services appeal (OPA-PA-10-001).
2.
Requires a determination indicating the rationale for using this type of contract and the reasons why another contract form will not suffice. Every indefinite quantity contract must be reviewed every 6 months for a determination of the continued need for such a contract ( 3112(i)(2).). a. Therefore, all indefinite quantity contracts must either be for a term not exceeding 6 months or expressly give the government the right to terminate on any such 6 monthly review.
3.
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b.
If continued use of the supplies or services is required, the procurement must be conducted by competitive sealed bid or under the authority of the small purchase method. (Id.)
4.
To preserve competition, no indefinite quantity contract shall be used more than twice per fiscal year for the same supplies or services. (Id.) Requirements contracts are indefinite quantity contracts, so are also limited by this condition. a. This does more than insure competition, it also confirms it is of an indefinite quantity. If purchases take place regularly, the quantity required becomes more ascertainable; the quantity is no longer indefinite. (1) If items are purchased continuously or more than twice in a fiscal year, the definite quantity contract type is required. A definite quantity contract is a fixed-price contract that provides for delivery of a specified quantity of supplies or services either at specified times or when ordered. ( 3112(i)(1).)
5.
The FAR (Subpart 16.501-2) also groups indefinite quantity contracts together with firm quantity contracts that are subject to indefinite delivery requirements. (A note on nomenclature. The FAR distinguishes between what it calls Delivery Order contracts, for supplies, and Task Order contracts, for services. In both cases the Orders substantively refer to a requisition under the indefinite quantity/delivery contract.)
K.
Requirements contracts (2 GAR 3119(i)(3). 1. A requirements contract is an indefinite quantity contract for supplies or services that obligates the territory to order all the actual requirements of the designated using agencies during a specified period of time. (Id.) Since a requirements contract is a variant of indefinite quantity contract , all general indefinite quantity contract provisions discussed above also apply to requirements contracts. UCC 2306 (13 GCA 2306), which supplements the Procurement Act (5 GCA 5002), defines and provides conditions of use of requirements contracts. a. As explained in the Editorial Commentary to the UCC 2306, a requirements contract of the type described in 2 GAR 3119(i)(3) is an agreement where the quantities are left open, but is measured by the buyers needs.
2.
3.
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b.
Thus, the open quantity character of the requirements contract runs contrary to the usual requirement of contract certainty, expressed in UCC 2201(1): ... the contract is not enforceable under this paragraph beyond the quantities ... shown in such writing. The open-endedness of a requirements contract and the certainty principle of contract formation are tenuously tied together with the requirement of obligation to purchase requirements in good faith.
c.
4.
A requirements procurement contract must obligate the territory to order all actual requirements during a specified period of time from a particular contractor. a. [R]equirement contracts shall include ... a provision which requires the territory ... to order their actual requirements of the supplies or services covered. (2 GAR 3119(i)(3)(A).) The concept of actual requirements carries with it the notion that there is a historical, factual context in which actual requirements can be ascertained with the certainty that the law requires for enforceability of contract: here, not certainty as to the precise quantum, but certainty as to the very real expectation of requirement. Without this context, a requirements contract would be invalid as illusory.
b.
5.
A provision in a solicitation, award or contract which purports to allow, but not require, an agency to purchase additional items specified in a solicitation during the course of the contract (for instance, by making purchases discretionary) is not a valid requirements contract because it lacks mandatory effect. a. When the solicitation or contract provision simply allows an agency to purchase additional items, it is an option provision. (See 2 GAR 3119(k) and discussion below for requirements for a valid option provision.) An option which is said to allow an agency to purchase as much as it desired would be too uncertain in quantity to be specifically enforceable, so would be an invalid contract provision. The only type of contract that is enforceable to obtain the nebulous requirements flexibility is one which strictly meets the careful prescriptions of the law for such a contract, which requires an obligatory and not discretionary commitment. The author is of the view that a requirements contract is intended only for purchases and is inconsistent with leases of equipment or supplies. A solicitation of a lease implies use of equipment or supplies for a defined period of time from the date of the lease (see
b.
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discussion of the lease form of contract below). A requirements contract refers to a requirement to order all requirements during a specified period of time. If a lease of an item was ordered during the requirements period which extended use of the item beyond the specified period of the requirement term, it would not be a valid requirements contract because it would allow the government to obtain supply of an item beyond the time period of the specified requirement. 6. The requirement to purchase all agency requirements from a select contractor, in effect and substance, establishes a sole source of supply, and would escape the usual conditions and restrictions applicable to the sole source method of source selection (see 2 GAR 3112). Given the disfavor of sole source methods of source selection, any use of a requirements clause which is substantively a sham sole source procurement should be strictly scrutinized for abuse. a. To be clear, a requirements contract is a form of contract resulting from an authorized method of source selection and solicitation and is not a method of source selection. (1) A requirements contract can only result from an appropriately conducted method of source selection. Indeed, [s]hould the department or agency continue to require the supplies or services [under any form of indefinite quantity contract], the procurement for such supplies or services must comply with 3109 (Competitive Sealed Bidding) or 3111 (Small Purchases). (2 GAR 3119(i)(2).) This means, regardless of the time period specified in a requirements contract compatible with 3119(i)(3), if purchases become so regular as to be reasonably anticipated, the requirements contract must be allowed to expire at one of the required 6 month reviews.
(2)
b.
For this sole source supply effect to be valid, all of the criteria necessary to establish an indefinite quantity requirements contract must be strictly adhered to, including the limits on usage of the contract purchases to not more than twice in a fiscal year.
7.
There are special considerations, in both UCC 2306 and 2 GAR 3119(i)(3) which relieve the buyer or the seller, depending on the specific circumstance, from the obligations of the requirements contract; e.g., when there are unusually large orders or when the territorys nonrecurring, special needs. See the discussion of incremental awards in Article XV.N below, which is
8.
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not a needs-based contract at all, but a means of allowing the government to portion out its requirements to more than one contractor in certain limited circumstances. L. Leases, of both equipment and other supplies or real property, must be in the best interests of the territory and not used to circumvent normal procurement procedures. (2 GAR 3119(j).) 1. Note that a multi-year contract (defined in2 GAR 3121(a)) is not a lease arrangement, even though a lease may extend for several years (see discussion of multi-term contracts above). 2 GAR 3121(c) specifically says that the multi-term contract regulation does not apply to any other contract including, but not limited to, contracts for construction and leases (including leases of real property). Note that a lease containing an option to purchase must be let by competitive sealed bid or sole source in order for the option to be valid. (2 GAR 3119(k)(3).) Note 5 GCA 22704, which purports to grant to the Governor the power to acquire leases of office space and facilities. That provision is derived from old Government Code 6116 and was added by P.L. 5-90 in 1960. The subsequent enactment of the Procurement Act would have rendered that provision obsolete, though it remains on the books.
2.
3.
M.
Options to purchase, renew, extend (2 GAR 3119(k): a. Options must only be for the benefit of the territory, not the contractor. Options must be specified in the original solicitation. Before any option to renew, extend or purchase is exercised (including an option in a lease): (1) the Procurement Officer should ascertain whether a competitive procurement is practical and more advantageous to the territory. A written record of the findings and determination must be made part of the contract file.
b. c.
(2)
N.
Multiple Source Contracts (2 GAR 3122). This involves splitting up contract requirements amongst multiple contractors, and thus is often referred to as multiple awards. They do not technically share contracts as each one is independent. These are not generally favored since it creates the environment for collusion to occur. There are two varieties allowed:
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1.
An Incremental Award is a variety of Definite Quantity Contract (sub 3122(a)): a. An incremental award is the award of portions of a Definite Quantity contract to more than one contractor; each portion of which is for a definite quantity, all totaling 100% of the governments requirements. Can be justified only when necessary to obtain the total quantity the government needs, such as when no single contractor has sufficient capacity to meet the needs. Intent to award incrementally must be stated in the solicitation along with the criteria for how the definite quantities will be divvied up.
b.
c.
2.
A Multiple Award is a variety of Indefinite Quantity Contract (sub 3122(b)): a. A multiple award is an Indefinite Quantity contract, more particularly, a Requirements contract. The government becomes obligated to buy all of its requirements from the awarded multiple contractors. Multiple awards must be procured either by the competitive sealed bid method, the small purchase method or emergency procurement method of source selection. To avoid the facilitation of collusion, multiple awards cannot be made when a single award can be made to meet the territorys needs without sacrificing economy or service, nor for dividing business or settling low tie bids. Multiple awards must be allocated to the least number of contractors capable of meeting all government requirements.
b.
c.
d.
O.
Construction contracts 1. The various methods of management for construction and the corresponding types of construction contracts are too numerous and too technical for the scope of this paper. Suffice to say that there are different considerations to be made in choosing between them, according to circumstances and desired outcomes. See, generally, 2 GAR 5102 and 5106.
XVI.
PROCUREMENT PROTESTS
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A.
In case you missed this in the discussion of the purposes and policies of the procurement law, burn this into your understanding of the protest provisions: 1. It is essential that bidders, offerors, and contractors have confidence in the procedures for soliciting and awarding contracts. This can best be assured by allowing an aggrieved person to protest the solicitation, award, or related decision. (Commentary No. 1, ABA Model Procurement Code 9101.)
B.
The ICMAs Service Contracting text, supra, at p. 139, begins its discussion of the protest procedures with the statement, Protests are the safety valve of public procurement.... Failure to address seriously every protest received can damage the integrity of the local governments bidding process. When bidders perceive a local government as having made arbitrary contract decisions, there is considerably less incentive to participate in future contracts. Prompt, objective, and fair responses to protests are necessary to retain the respect and confidence of bidders and contractors. The first key take-away here is that, if you are entitled to protest the solicitation or award, you MUST FIRST protest to the agency BEFORE you take your complaint to the Public Auditor or to court. (See, Order of Dismissal, In the Appeal of Mega United Corp., OPA-PA-09-001.) This is part of the notion of exhaustion of administrative remedies (see Article XXIII.D.5). Protesting first to OPA (rather than the agency) is a mistake often made; the author did so himself once (IBSS vs UOG, OPA-PA-06-004). It can be a fatal mistake if you run out of time to protest to the agency (but see discussion of equitable tolling in Article XVIII.D.3 dealing with appeals, below). 1. A person who has a complaint about a solicitation or award should seek resolution of their complaints initially with the Procurement Officer or the office that issued the solicitation. (2 GAR 9101(b).) But see discussion of differences between complaints and protests in Article XVI.J.1 below, under the topic Format of Protest.
C.
D.
ONLY AGGRIEVED BIDDERS CAN PROTEST: Any actual or prospective bidder, offeror, or contractor who may be aggrieved in connection with the method of source selection, solicitation or award of a contract, may protest to the CPO, the Director DPW or the Head of a Purchasing Agency, whoever it was that handled the solicitation. (5 GCA 5425(a).) 1. This is intended to give rights only to persons who may be aggrieved. a. Note that whether a person is aggrieved, and may therefore protest, is a matter solely within the context of the procurement process. Persons may be aggrieved in connection with the procurement matters stated above, but the connection must be related to the
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substantive procurement jurisdiction of the agency and reviewing authorities. For instance, a person may be aggrieved by ethical breaches which occurred in connection with a solicitation, but, for jurisdictional purposes, those breaches, in and of themselves, without adequate nexus to the procurement process, may be insufficient to constitute grounds to protest or appeal a solicitation. The jurisdictional elements are discussed in this and subsequent Articles, below. 2. Who is an aggrieved person within the jurisdictional context of the procurement process? a. We must start with the plain meaning of aggrieved. A dictionary defines aggrieved to mean to be wronged or to injured in ones legal rights. The root word is grievance. A grievance is a circumstance thought to be unjust or injurious and ground for complaint against a real or imagined wrong. (New World Dictionary of the American Language, Second College Edition, 1972.) (1) If, then, you are in a well run race and you lose, you simply lose: you are not aggrieved. Losing is an expected consequence of the race, in which there is only one winner (discounting dead heats). But if you are fouled in the race or the race is run improperly, you are aggrieved. This obvious statement is made here because of the too numerous instances in occasional decisions that loosely and gratuitously make the bald statement that a loser in an IFB or RFP is aggrieved. The author respectfully disagrees that a bidder or offeror who simply loses is not, by that fact alone, an aggrieved person. (a) For instance, in the GCIF Appeal, the Public Auditors Decision, at p. 10, flatly stated, a losing bidder is an aggrieved bidder. Tumon Corporation v. Guam Memorial Hospital Authority, CV 1420-01, Line 13, Page 3, Decision and Order dated October 22, 2001 (Guam Superior Court). ... GCIF is an aggrieved offeror because it was not selected as the best qualified offeror. i) The author also respectfully asserts the stated proposition and reliance on the Tumon Corporation decision is wrong; the Superior Court did not say that, and the decision was not about a losing bidder. The posture of that case is a bit convoluted because it actually involved a protest by the winning bidder in a
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solicitation in which , after protest by the losing bidder and notice of intent to award, the agency rejected all bids. The Court did not hold that a losing bidder is an aggrieved bidder, but only that a winning bidder is not an aggrieved bidder. The actual statement of the Court at the citation provided is, Section 5425(g) applies to a protest by a losing bidder after the winning bidder has been declared. ... In this case, Tumon received the notice of intent to award the contract, therefore, Tumon [the winning bidder] cannot be considered an aggrieved bidder. (Emphasis added.) The reiterated conclusion of the Court (p. 5, line 3) was that the bid winner is not aggrieved, not that a bid loser is aggrieved. a) Query whether the Courts holding was even necessary to the result reached, considering the agency had rejected all bids in any event.
(2)
If losing bidders or offerors are by such a rule ipso facto aggrieved, that would have enormous disruptive consequences to the procurement process. (a) First, that would mean that all losing bidders and offerors could, and maybe should, appeal every IFB or RFP, notwithstanding the sanctions for filing frivolous protests (see Article XIX.C.2.d.(10) infra); after all, if the law is that they are consecrated as aggrieved simply by losing, how could an appeal be frivolous? The law specifically gives aggrieved persons such right of protest. Second, it would essentially require that all protests be filed within 14 days of notice of award or selection; if you are a loser and therefor aggrieved, you only have14 days of receipt of notice of this fact in which to protest. i) Note the inconsistency here in the findings in the GCIF Appeal (pp. 8-9). As quoted above, the Decision held GCIF was aggrieved because it was not selected as best qualified offeror. GCIF learned, or should have know,
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(b)
of that fact on March 5th . It did not file its protest until August 5th, nevertheless the Public Auditor found its protest was timely, which would be inconsistent with any rule that the aggrievement arose on the date the offeror learned it was not selected as best offeror. The timeliness finding was based on the fact GCIF discovered facts by which it may actually be aggrieved within the protest filing deadline. Thus, although the analysis rightly proceeded on the basis that there were colorable facts to support a claim of aggrievement, the Decision nevertheless included the unnecessary and irrelevant statement that non-selection, by itself, was sufficient to render the protestor aggrieved. (c) See discussion of the CNMI Public Auditors Decision in the Appeal of Island Business Systems & Supplies, CNMI OPA, Appeal No. BP-A057, in case review Article XXIV.A.11.b below.
b.
Beyond the plain meaning of aggrieved are other considerations. Conceptually, a person is not aggrieved if they would not be directly affected by whatever error is alleged. This is often referred to as a standing issue, and described by the conclusory statement the person was not an interested person. Such cases typically distinguish between direct and remote interests. In traditional standing analysis, remote interests are held to lack standing, while those who can show direct interests satisfy at least one criteria for standing: (1) A person determined to be non-responsible (thus ineligible for award in any event). (Appeal of RGS Enterprises, Inc., MSBCA No. 1106, Apr 8, 1983.) The same logic would apply to a person whose bid has been evaluated as nonresponsive. (a) The US Court of Appeals for the Federal District has noted that responsiveness is akin to standing, thus a bidder whose bid is nonresponsive has no standing complain of the solicitation. In U.S. v. IBM 892 F.2d 1006 (1989), the Court said: "We see responsiveness as another facet of the interested party inquiry. When responsiveness is an issue, it must be resolved before the board can
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(b)
proceed. If a bid is not responsive, the protester has no more right to invoke the office of the board than the proverbial man on the street. A nonresponsive bidder is the epitome of one who lacks a direct economic interest. This is not a mere technicality; it is the predicate for the board's right to intervene in governmental procurements." (At p.1012; bold and italic emphasis added.) (2) A non-bidder, including a person whose bid was lodged untimely. (Appeal of Delmarva Drilling Company, No. 1096, Jan 26, 1983.) Query whether this would apply to a non-bidder who became a prospective bidder when the specifications were materially changed in the course of the bid but did not submit a bid based on original specifications. A person whose competitive position would not be improved by the protest, such as when the protest was brought against the lowest two bidders and the protestors bid was sixth highest. (Appeal of Erik K. Straub, Inc., No. 1193, Sep 11, 1984.) A person who was a potential subcontractor to an unsuccessful bidder. (Appeal of Coach and Car Equipment Corporation, No. 1531, Sep 7, 1990.) A person who was a supplier to an unsuccessful bidder. (Appeals of PTC Corporation and Ion Track Instruments, Inc., No. 2027, Jan 30, 1998.) Cibinic and Nash say that the FAR does not have a specific statement of qualifications limiting who may file a protest, but notes the interested party concept as developed in the Comptroller Generals cases is generally followed. (Cibinic and Nash, p. 1485.) A very good exposition of the Federal cases construing the concept is found in the Interested Party [IBCs] Statement Re Remedies, at pp. 3-5, submitted in In the Appeal of Guam Community Improvement Foundation, Inc., OPA-PA-09-005. Although the Guam procurement law and regulation has somewhat muddied the distinction between a protestor and an interested party (see discussion of the parties to protest further below in this Article XVI.K.2), the standing notion as discussed above would apply equally to protestors and interested parties.
(3)
(4)
(5)
(6)
(7)
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c.
Finally, there is the conditional may, as in who may be aggrieved. As noted above, the author disagrees with the absolute statement that a bidder or offeror is aggrieved merely by not being selected. The plain language of the test is not that the bidder is aggrieved, only that she may be aggrieved. (1) 5 GCA 5425(a), which gives an aggrieved person the right to protest, implies but does not explicitly state that the protestor must adduce the facts giving rise thereto. The regulations (2 GAR 9101(c)(3)(c) and (d)) requires the protest to contain a statement of reasons for the protest; and supporting exhibits, evidence, or documents to substantiate any claims unless not available within the filing time.... (a) In the GCIF Appeal, supra, which involved a preaward protest of an RFP, the government argued that the protest was invalid because it failed to specify any facts in support of the protest, which was based on surmise and supposition because the facts it needed to support its surmise and supposition were in the procurement record, which was unavailable to the protestor until after the award was granted. The Public Auditors Decision (at p. 10) accepted that the supporting material was not available within the filing time, citing the regulation above. The Public Auditor was able to entertain the appeal because she had the ability to review the record in camera to make her own determination of the suppositions even though the record was sealed to the protestor and public.
(2)
That would be a rare case, however, and in most cases, as a matter of standing, the protestor should be able to point to more than conclusory and unsupported allegations of impropriety.
d.
Who is a prospective bidder, offeror or contractor? (1) The plain meaning of the term prospective suggests a prospective bidder is someone who might reasonably be considered to bid or offer, but without any commitment to do so. Prospective connotes expectation, but not firm commitment. Underlining the uncertain character of the word is the statute itself, which says actual or prospective, clearly distinguishing the certain character of actual from the ambivalent character of prospective.
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(2)
Statutory construction suggests that, for purposes of bid protests, prospective is meant to have a broad interpretation consistent with the ambivalent character of its plain meaning, because a more restrictive usage is specifically applied in identifying those persons entitled to bring a procurement action to the Superior Court under 5 GCA 5480. (a) 5480(a) allows such an action in the Superior Court between the government and a bidder, offeror or contractor, either actual or prospective. 5480(e), however, specifically narrows the scope of prospective to the point of absurdum by saying, for purposes of actions under this Section a prospective bidder, contractor or offeror is one who will actually submit a bid, contract or otherwise offer his services if, in the actions permitted by this Section, such person would prevail. The Official Comment to this section explained that this departure from the MPC to limit the definition of prospective in this particular section was intended to limit it to a person who actually will submit a bid, contract or offer if he succeeds in his suit rather that to permit wider suits by persons who may allege some vague interest in the solicitation or contract, but who plan no immediate action. i) The author offers the view that this definition of prospective is awkward, unhelpful and likely unenforceable. It puts the cart squarely before the carabao. a) First, the intent of the definition is likely already covered by traditional notions of standing, and would restrict persons of remote interests from bringing the action, as suggested in the discussion of aggrieved bidders, immediately above. Second, what is the effect of such an action if the prospective bidder, having won the action, fails (for whatever reason) to enter a bid? Does this create a condition subsequent such that the failure
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(b)
b)
negates the action in the first place? That would be an untidy application of judicial economy. It is generally unsound, vague and ambiguous to make such standing dependent on post hoc determinations. c) The author is unaware of any instance where this definition has been put to the test.
e.
Standing by being aggrieved: It was discussed above that responsiveness is closely akin to standing. At some level, the question as to whether a remotely aggrieved person can protest also starts to look very much like the question whether they have standing, but they are not exactly the same thing even if legal results are similar. Issues of standing involve, primarily, protected rights and interests; issues of aggrievement involve, at its most fundamental level, notions of damages, particularly contract damages (e.g., direct vs indirect damages) and proximation (in the Hadley v. Baxendale sense of consequential damages). (1) The Guam Supreme Court considered a case brought in Superior Court that originated in a bid protest, in Guam Imaging Consultants, Inc., supra, 2004 Guam 15. The protest was brought on behalf of a group of persons on behalf of a Guam corporation to be formed. (a) It might be pointed out here that the concept of preincorporators organizing the business of a nascent corporation is probably as old as corporations, which is not that old. The legal Hornbook, Lattin on Corporations, written in 1959, in its Preface began, [m]odern business corporation law in America is barely a half-century old, though its roots were well started by the middle of the nineteenth century. Professor Lattins book devotes a Chapter to Preincorporation Management, wherein he discusses the common situation where [t]he party dealing with the promoters may, and usually does know that the corporation is nonexistent, and the agreement may read by and on behalf of the M Corporation, a corporation to be formed.... (At p 100.)
(b)
(2)
The Supreme Court did not make any specific holding in the
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Guam Imaging Consultants case as regards either aggrieved or standing, but did note that Guam law (18 GCA 26101, 26103) requires, in order to bring an action in court, that the persons bringing the action under a fictitious name must first file and get a fictitious business name Certificate, and failure to have one may deny standing in the court action. This is a very narrow statement which should not be read as requiring either a Fictitious Business Name Certificate (which can be cured in the same manner as acquiring a business license) or other evidence at the stage of the administrative agency protest. 3. GovGuam, when rendering a Protest Decision, can impose costs (but not attorneys fees) on any protester who files a protest fraudulently, frivolously or solely to disrupt the procurement process . (2 GAR 9101(g)(2).) a. Costs were applied for but rejected by the Public Auditor in In the Appeal of Guam Publications, Inc., OPA-PA-08-007 (beginning at p 17.). The Public Auditor noted that a bidders right to seek clarification and further inquiry regarding an IFB, and the right to protest, absent any other evidence of wrongdoing, do not disrupt the procurement process.
E.
Who do you protest to? 1. The Guam Procurement Regulations, but not the law, are apparently inconsistent in defining the proper government authority to whom the protest must be made. a. Recall that either the CPO/GSA (for supplies and services) or DPW (for construction) are intended to be the central procurement authority for all of GovGuam. (See Article III, above.) The CPO is granted authority to (and in some cases directed to) delegate her procurement authority to the various GovGuam agencies. As discussed above, all agencies who have been given any procurement authority have derived that power by delegation, not by law. However, 2 GAR 2107(d) specifically states that the following authority shall not be delegated: (d) Section 9101 (Authority to Resolve Protested Solicitations and Awards, Stay of Procurement During Protests). Nevertheless, 2 GAR 9101 (which in fact is headed, 9101. Protest Resolution by the Chief Procurement Officer, the Director of Public Works, or the Head of a Purchasing Agency), says that Protests shall be made in writing to the Chief Procurement
b.
c.
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Officer, the Director of Public Works, or the head of a Purchasing Agency. d. This is consistent with the language of the Procurement Act in 5 GCA 5425(a), (b) and (c), thus overrides any inconsistent regulation. This apparent inconsistency derives from the language of the Model Code and Regulations. The author cannot explain the apparent inconsistency other than to note that, while allowing agency authority to conduct procurement, the overall aim of the procurement organization is to maintain uniformity and centralization, and give the CPO and DPW Director supervisory oversight of all procurement. In that scenario, requiring all protests to be brought to the CPO would enhance uniformity. Nevertheless, any intended scheme must give way to the plain and clear language of 5 GCA 5425.
e.
2.
The practical answer to the question to whom do you protest? is, protest to the body which issued the solicitation, because if they have the authority to procure, the authority to resolve should follow, under 5 GCA 5425.
F.
Protestors may file a protest on any phase of solicitation or award including, but not limited to, specifications preparation, bid solicitation, award, or disclosure of information marked confidential in the bid or offer. (2 GAR 9103(c)(2).) Incorrect use or execution of a method of source selection is a ground for protest. (5 GCA 5425(a).) TIMING FOR PROTEST FILING: 1. General Rule: 14 days from knowledge of aggrievement. The protest shall be submitted in writing to the Head of the Purchasing Agency within fourteen (14) days after such aggrieved person knows or should know the facts giving rise thereto. (5 GCA 5425(a).) a. The period allowed for filing an appeal or a request for review is usually short to speed up the procedure. For the review process to be credible and effective, however, the aggrieved party must be given time to verify the facts and to estimate the potential risks and benefits of lodging an appeal; allowing enough time for filing also helps avoid premature and unfounded complaints. The period of filing in some countries is so short as to put in question the effectiveness of the review and due consideration of the merits of the appeal. (Public Procurement in Asia/Pacific, supra, Part 1.4.)
G.
2.
If your protest is not filed within the time required, you cannot appeal to the Public Auditor. (In the Appeal of IBSS [vs GPSS(2)], cited above, OPA John Thos. Brown 2011
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PA-08-011, p 6: The threshold issue in this matter is whether IBSS December 4, 2007, protest was timely.) 3. That IBSS case, supra, is one example of the protest condition that the protestant must know or should know of the facts giving rise to being aggrieved. In that case, IBSS knew for at least 2 years that GPSS was purchasing copiers from a competitor, but it alleged that it did not know, and GPSS would not disclose despite request, whether there was any legal basis for the purchase, despite suspicions it was improper. The Public Auditor held that IBSS did not know, and could not know, it was aggrieved until it was finally given the procurement file, which revealed the purchases were not conducted in accordance with the law and regulation. IBSS had filed its protest within the time limits of revelation of those facts, so the appeal was upheld. a. Where a protesting offeror had, at an earlier date, received notice of intent to award the contract to another offeror, but did not protest until later when information was revealed in a government memorandum which suggested the protester may be aggrieved, the Guam Supreme Court held the protesting offeror did not know, nor should it have known, of the facts giving rise to this protest until it received the memorandum, thus the protest was timely filed based on that revelation, and was not time barred because of the earlier notice of intent to award to another. (Guam Imaging Consultants, Inc. V. GMHA, 2004 Guam 15, at 33.) See discussion of In the Appeal of Latte Treatment Center, Inc., OPA-PA-08-008, and Appeal of Island Business Systems & Supplies (CNMI OPA case), both discussed in Article XXIV.A.11.b below, regarding whether mere notice of award to another is sufficient to trigger the 14 day protest filing deadline; that is, whether a losing bidder is by that fact alone aggrieved. Also, see the GCIF Appeal (OPA-PA-09-005), where it was held that protest was timely though filed long after notice that another was selected best qualified offeror, when the protest was filed within six days after protestor became aware of facts by which it may be aggrieved. In a Maryland MSBCA case, a protestor participated in a procurement process for several months before becoming aware that there were protestable grounds that the procurement was improperly non-competitive. It filed protest within the time required after learning of those grounds. The MSBCA held the protest was timely filed. (Appeal of The Chesapeake and Potomac Telephone Company of Maryland, MSBCA No. 1194 July 30, 1984, supra.)
b.
c.
4.
POSSIBLE EXCEPTION for Pre-bid-opening issues: The second key takeaway is that if you have a complaint about the method of source selection or
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its implementation or the form or substance or anything else connected with the form or conduct of the solicitation occurring or revealed up to the time set for submission of bids or proposals (which includes issues regarding specifications), you should, if at all possible, protest BEFORE the time set for opening the bids. a. IF you cannot submit the protest before bid opening, you probably should not submit a bid or proposal if you want to pursue your protest. It is hard to pinpoint the law on this, and there is as yet no definitive Guam court or OPA decision known to the author, but it is considered to be taking unfair advantage of the procurement process if you have a complaint about the conduct of the bid but do not say anything about it until you see what the other bids are or if you got the award anyway. In In the Appeal of Guam Publications, Inc., OPA-PA-08-007, the Public Auditor ruled that a protest was timely brought on an issue regarding the substance of the IFB even though the protester had bid and even though the protest was brought after bids were opened. The Decision distinguished a New Hampshire case reaching the opposite conclusion, noting the New Hampshire result was dictated by a particular statute. The Public Auditor said, at p 8, Guam procurement and regulations have no such pre-preposal procedure. Instead, Guam Procurement Law and Regulations merely require a protest to be filed within fourteen (14) days after an aggrieved bidder or potential bidder knew or should have known of the facts giving rise to the protest. (1) See Appellants arguments in Application for Enforcement of Stay of Solicitation, In the Appeal of IBSS, OPA-PA-08-012, footnote 9, http://www.guamopa.org/docs/procurement_appeals/Applica tion_for_Enforcement_of_Stay_of_Solicitation_08_012.pdf . But see, L.P. Ganacias Enterprises, supra, a Superior Court case, where the Judge found many improper irregularities in the bid process but ruled he was unable to offer the Plaintiff any relief because the Plaintiff bid on the IFB. The Judge found (at page 19) the Plaintiff did not claim that the bid process was improper from the outset.... Had Plaintiff believed that the actual Invitation itself was improper or illegal, the Plaintiff should have sought to enjoin the bid process. Instead, the Plaintiff submitted bids pursuant to the Invitation for Bid, and thus the Court finds that the Plaintiff cannot now claim as a basis for relief, the fact that the
b.
c.
(2)
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Invitation For Bid was contrary to law. (a) It must be noted, however, that this was not a case brought under the review processes of the Procurement Act, but was a civil action seeking a preliminary injunction, which had to be judged by those deferential and unique standards and procedures applicable to such a civil court remedy (see, L.P. Ganancias, at page 5 et seq.), not by the administrative procedures of bid protests required under the Procurement Act. It is therefore distinguishable on the applicable law.
d.
Neither the Model Procurement nor Guam procurement law expressly support this possible exception. (1) In contrast, where a state statute specifically requires that a protest alleging improprieties in the solicitation which are apparent before bid opening be filed before bid opening, then failure to file before bid opening is untimely. This rule was articulated in a Model Procurement Code state, Maryland, which deviated from the MPC by specifically requiring such a result. (See, Appeal of Dasi Industries, Inc., No. 1112 (MSBCA May 5, 1983.) This would indicate that adoption of the MPC without such a deviation would not require the same result. Likewise, Federal procurement regulations also specifically require pre-opening protests for pre-opening issues. (FAR 33.103(b)(2).; see also, 4 C.F.R. 21.2(a)(1): Protests based upon alleged improprieties in a solicitation which are apparent prior to bid opening or the time set for receipt of initial proposals shall be filed prior to bid opening or the time set for receipt of initial proposals.) Thus, referring to FARs very formal rules, Cibinic and Nash say, [p]rotests based on alleged improprieties in a solicitation that are apparent prior to bid opening or the closing date for receipt of proposals must be filed prior to bid opening or the closing date for receipt of proposals. In all other cases, protest must be filed not later than 10 days [the FAR requirement] after the basis of the protest is known or should have been known, whichever is earlier. (At p 148586.)
(2)
(3)
e.
So, if you have the case and have not been able to file a protest before bid opening, you should be encouraged to proceed with a
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protest, even if you have submitted a bid but especially if you have not, so long as you have met the 14 day limit. Still, if you can avoid the issue, do so. 5. You can protest issues revealed at or after bid opening, including rejection of bids or proposals, matters of responsiveness and responsibility, and the like, after the bid opening, within the 14 day general rule. Be aware of the Federal constructive notice rule for IFBs. a. As noted above, the Guam Supreme Court, in Guam Imaging Consultants, has held that notice of intent to award, in and of itself, does not provide notice to an aggrieved party of the facts of deficiencies in the procurement process by which the party is aggrieved. That is, the notice of award does not provide constructive notice of facts which the aggrieved part should know. The Court did not distinguish, however, the application of the know or should know rule based on the method of source selection; the federal rule does. In Guam Imaging, although arising in the context of an RFP for professional services (i.e., 5 GCA 5216), in fact, the basis for the protests in that case was the interim award of a sole source contract (5 GCA 5214), and the exclusivity of the RFP specifications to the extent it was a de facto sole source procurement. It would not be entirely accurate, then, to say that the Guam Imaging case was one dealing with, or restricted to, the RFP method of source selection. This is important to bear in mind when analyzing the federal constructive notice rule, which arises in the context of IFBs but not RFPs, and any implications for that rule under Guam procurement law. The procurement decisions in federal IFBs have, since long before modern procurement laws, held fast to the view that, in an IFB context (but not the RFP context see 4 C.F.R. 21.2(a)(1)), the know or should know rule is just one rule: you are charged with constructive notice of the contents of all bids at bid opening regardless of lack of actual notice of any reason to suspect anything in any other bid that may aggrieve you. Thus, the clock runs on any deficiencies in the other bids once bids are opened, regardless (almost) whether the government recognizes the deficiencies or, if it does, acts appropriately in the circumstance; that is, even if there is glaring error in the other bid that the government misses or ignores, you are bound to have knowledge of it and cannot protest once the clock chimes even if you are aggrieved by the deficiency and even if you later actually discover the deficiency and protest as soon as you make that discovery.
6.
b.
c.
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(1)
The author does not know whether the constructive notice rule was codified in or derived from prior express language in the federal procurement regulation. He does note, though, that an early version of the CFR was quoted in a Comptroller General Decision to include express reference to a constructive notice rule in the following context. (a) This matter involved an appeal for review of an adverse agency action. The direct quote to 4 CFR 20.2(a)(1978) from the Decision stated the required time for appeal was 10 days of formal notification of or constructive knowledge of initial adverse agency action. (In the Matter of Mueller & Wilson, Inc., Comp. Gen. Dec. B-193008, Mar. 7, 1979; emphasis added..) This reflected, at least in the context of administrative review, at that early time, acceptance of a constructive notice standard, which is generally a more strict notice concept than know or should know.
(b)
(2)
This constructive notice rule is not obvious from the current language of the federal procurement regulation, which reads much the same as Guam law, e.g., 4 C.F.R. 21.2(a)(2): Protests other than those covered by paragraph (a)(1) of this section [see supra] shall be filed not later than 10 days after the basis of protest is known or should have been known (whichever is earlier).... (a) Note that this particular know or should know rule is applicable to the initial protest, not the notice of review as mentioned above. The author has not been able to track down prior versions of this CFR section to see if it at one time also contained the constructive notice element.
(3)
The absoluteness of the constructive notice rule is illustrated in the Comptroller Generals decision in The Matter of Thomas May Construction Company, B-255683, March 23, 1994. (a) In that case, bids were opened on September 16 and award was made to the low bidder on September 29. The protester immediately sought a copy of the low, winning bid by FOIA, got the information on November 3 and promptly filed protest on
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November 5. The protest alleged (without detail in the decision) that the bid bond of the winning bidder was defective. A defective bid bond should have resulted in the low bid being thrown out as nonresponsive. (b) The Comptroller General said, our Bid Protest Regulations, 4 C,F.R. Part 21 (1993), contain strict timeliness requirements for filing protests. Under these rules, protests not based upon alleged improprieties in a solicitation must be filed no later than 10 working days after the protester knew, or should have known [italics added], of the basis for protest, whichever is earlier, 4 C.F.R. S 21.2(a)(2); Health Research Assocs., Inc,, B-237075.2, June 8, 1990, 90-1 CPD I 541. Moreover, a protester cannot sit idly by while awaiting information that provides the basis for its protest, but instead must diligently pursue [bold emphasis added] the information within a reasonable time. Hartford Constr. Core., B-235642.2, Aug, 29, 1989, 89-2 CPD 187. Here, Thomas May sought the publicly available information that formed the basis for its protest only after it was apprised that award was made to a lower-priced bidder. Since this procurement was conducted by sealed bidding, there was a public opening of the bids, Federal Acquisition Regulation (FAR) 5 14.402-1(a), and once bids were opened, the public, including the protester, was permitted to examine the bids submitted. FAR S 14,402-1(c). Thomas May made no effort to examine or obtain a copy of any of the bids submitted once bids were opened; it did nothing until after it received the award announcement. Where there is a public bid opening, we think it is incumbent upon bidders to act promptly after bid opening to obtain information on the bids received, including copies of the bids themselves if necessary, so that upon receipt of notice of award the bidders will be aware of any alleged defect in the winning bid that would provide a basis for protest. [Bold emphasis added.] See Haz-Stor Co , B-251248, Mar. 18, 1993, 93-1 CPD 242. Here, we find that Thomas May did not diligently pursue the basis of its protest as it should have promptly sought the publicly available information prior to award. Because Thomas May's protest filed November 9, more than 10 working
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days after it was apprised of the September 29 award, its protest is untimely. (c) It is interesting to note that, in this case, the Comptroller started the clock ticking on the date of notice of award, not the date of bid opening; other cases have indicated the bid opening could begin the countdown.
(4)
To similar effect are decisions of the MSBCA, an ABA Model Code state (influenced, it seems, by close proximity to the seat of federal procurement decision-making). When the facts would be apparent from a review of documents available for public inspection, the seven-day period under COMAR 21.10.02.03B begins to run from the date the document is available for review, not from the date the bidder actually reviews the document. Utz Quality Foods, Inc. and Coca-Cola Enterprises, Inc., MSBCA 2060 and 2062, 5 MSBCA 441(1998)(the seven-day period for filing a protest ran from the date the protestor knew of the contract awarded to another party, not from the date the protestor reviewed the contract); Potowmac Engineers, MSBCA 2257, 5 MSBCA 508(2002) (where the basis for protest would have been known upon a review of a bid, the deadline for filing a protest is seven days from the date bids were available for public inspection, whether or not the protestor reviewed the bid on that date). [Bold emphasis added.] (In The Appeal of Juice Co., Inc., MSBCA 2387, 02/13/04, holding in that case that the clock began running from notice of award.
d.
One point of differentiation between the federal rule of constructive notice and the Guam rule of know or should know timing is that, in the federal rule, there are a multitude of filing rules, depending on many factors, each with its own nuanced differences, depending in largest part on the kind of information a bidder or offeror might be expected to have at different times and under different circumstances, based on the differences in the method of source selection used. (4 CFR 21.2(a), (b), and (c).) The author concludes that different rules are required because the harsh absolute constructive notice rule applicable to the sealed bid method of source selection is simply too harsh as a general rule. Guam, however, has one rule for all methods of source selection; thus its rule should not be so harsh as the federal sealed bid constructive notice rule. (5 GCA 5425(a).) Another point of differentiation between the federal constructive
e.
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notice rule and the traditional should know rule is that the timing bar in the federal procedures are not absolute, as under traditional limitations bars applied under the Guam law. Under the federal rule, there is an estoppel of sorts that allows the time to be extended for good cause shown, or where it determines that a protest raises issues significant to the procurement system, may consider an untimely protest. (4 C.F.R. 21.2(c).) Thus, the rule, though rigid, is not as harsh as appears at first blush. (1) Thus, in the Matter of Celadon Laboratories, Inc., B-298533, November 1, 2006, a protester objected to the objectivity of the evaluators of its proposal, but the agency rejected the protest as untimely because, it said, the protester knew about the composition of the evaluation team long before the protest. The Comptroller General said, we find that this protest is appropriate for consideration under the significant issue exception to our timeliness rules. 4 C.F.R. 21.2(c). What constitutes a significant issue is to be decided on a case-by-case basis. Pyxis Corp., B-282469, B-282469.2, July 15, 1999, 99-2 CPD 18 at 4. We generally regard a significant issue as one of widespread interest to the procurement community and that has not been previously decided. Satilla Rural Electric Membership Corp., B-238187, May 7, 1990, 90-1 CPD 456 at 3. The issue here--the application of conflict of interest regulations to peer review evaluators in SBIR procurements--is not one that we have previously decided and is one that can be expected to arise in future SBIR procurements. Accordingly, we consider the issue raised to be a significant one that should be treated on the merits. Substantively, the author believes the constructive notice rule is a peculiarity of the federal procurement regime which has been in place for nearly 75 years, and does not reflect more contemporary nuance, which, the author believes, is more in tune with the notion of whether a protester is aggrieved; while the federal rules do require a protester to have an economic interest injury as a factor of standing, the Guam code specifically restricts protesters to those who are somehow aggrieved by the procurement process. It is more based in the wrong to the bidder, not the defect in the system. The protest time is measured by the time after such aggrieved person knows or should know of the facts giving rise thereto; that is, of the facts by which the person is aggrieved.
(2)
(3)
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f.
The modern approach to the know or should know rule is exemplified in the Second Circuit Court of Appeals case, Staehr v. Hartford Financial Services Group, Inc., 547 F.3d 406 (2008). That case involved a party alleged to be wronged by securities fraud. The question was, what is the extent of the or should know duty of diligent inquiry, a concept mentioned in the Thomas May case, supra? (1) In that case, the defendants (below) claimed the action was time barred because there was an abundance of information published and available to the public (so-called storm warnings) which should have put the plaintiff on notice of its possible claims of wrongdoing. The trial court agreed, but the appeals court disagreed. The Court said, [t]he date on which one imputes knowledge to a reasonable investor for purposes of "constructive" or "inquiry" notice varies, depending on what the investor does after being placed on constructive notice: If the investor makes no inquiry once the duty arises, knowledge will be imputed as of the date the duty arose. However, if the investor makes some inquiry once the duty arises, [this Court] will impute knowledge of what an investor in the exercise of reasonable diligence, should have discovered concerning the fraud, and in such cases the limitations period begins to run from the date such inquiry should have revealed the fraud. (Internal citations omitted.) And later, "Storm warnings" need not detail every aspect of the alleged fraudulent scheme: "An investor does not have to have notice of the entire fraud being perpetrated to be on inquiry notice." Rather, a totality-of-the-circumstances analysis applies. See Shah, 435 F.3d at 249 (noting that a duty to inquire "arises `when the circumstances would suggest to an investor of ordinary intelligence the probability'" of fraud (quoting Dodds, 12 F.3d at 350)); see also de la Fuente v. DCI Telecomm., Inc., 206 F.R.D. 369, 383 (S.D.N.Y.2002) ("The issue ... is whether the objective facts and circumstances, taken as a whole, provided inquiry notice.") (emphasis omitted). Inquiry notice may be found as a matter of law only when uncontroverted evidence clearly demonstrates when the plaintiff should have discovered the fraudulent conduct. (Some internal citations omitted.) The Court concluded with this sliding scale approach to how much and what kind of notice is sufficient to trigger a
(2)
(3)
(4)
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duty to diligently pursue further actual knowledge: Given the objective standard for inquiry notice, there is an inherent sliding scale in assessing whether inquiry notice was triggered by information in the public domain: the more widespread and prominent the public information disclosing the facts underlying the fraud, the more accessible this information is to plaintiffs, and the less company-specific the information must be. g. An even more rigid line, opposite to rigid constructive notice such as applied under the federal rule, and moving far out on the sliding scale of Staehr, requiring, rather, some notice of actual wrongdoing, was developing in the Ninth Circuit (e.g., Betz v. Trainer Wortham & Co., Inc., 519 F.3d 863 (9th Cir., 2007) and mirrored by the Third Circuit, where one of its cases ended up in the US Supreme Court. In Merck & Co., Inc. v. Reynolds, 130 S. Ct. 1784 (2010) the US Supreme Court, while acknowledging approvingly the Staehr case, concerned the timeliness of a complaint filed in a private securities fraud action, and explored the contours of the diligent inquiry requirement when there is some notice of wrongdoing. (1) In this action, the complaint was timely if filed no more than two years after the plaintiffs "discover[ed] the facts constituting the violation." Again, compare this to the timeliness of the Guam protest, which is based on when such aggrieved person knows or should know of the facts giving rise to the aggrieved condition. Justice Bennans opinion for the Court included the following (internal citations and marks omitted; refer to source for accurate rendition): The parties and the Solicitor General agree that 1658(b)(1)'s word "discovery" refers not only to a plaintiff's actual discovery of certain facts, but also to the facts that a reasonably diligent plaintiff would have discovered. We agree. The rule arose in fraud cases as an exception to the general limitations rule that a cause of action accrues once a plaintiff has a "complete and present cause of action. This Court long ago recognized that something different was needed in the case of fraud, where a defendant's deceptive conduct may prevent a plaintiff from even knowing that he or she has been defrauded. Otherwise, "the law which was designed to prevent fraud" could become "the means by which it is made successful and secure"
h.
(2)
(3)
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(4)
Accordingly, "where a plaintiff has been injured by fraud and remains in ignorance of it without any fault or want of diligence or care on his part, the bar of the statute does not begin to run until the fraud is discovered." (The rule "regard[s] the cause of action as having accrued at the time the fraud was or should have been discovered. [Italics added.]) More recently, both state and federal courts have applied forms of the "discovery rule" to claims other than fraud. See 2 C. Corman, Limitation of Actions 11.1.2.1, 11.1.2.3, pp. 136-142, and nn. 6-13, 18-23 (1991 and 1993 Supp.) (hereinafter Corman) (collecting cases). Thus, treatise writers now describe "the discovery rule" as allowing a claim "to accrue when the litigant first knows or with due diligence should know facts that will form the basis for an action." Merck argues that the statute does not require "discovery" of scienter-related "facts." We cannot agree, however, that facts about scienter are unnecessary. The statute says that the limitations period does not begin to run until "discovery of the facts constituting the violation." Scienter is assuredly a "fact." We consequently hold that facts showing scienter are among those that "constitut[e] the violation." Merck says that the limitations period began to run prior to November 2001 because by that point the plaintiffs were on "inquiry notice." Merck uses the term "inquiry notice" to refer to the point "at which a plaintiff possesses a quantum of information sufficiently suggestive of wrongdoing that he should conduct a further inquiry." Because the statute contains no indication that the limitations period should occur at some earlier moment before "discovery," when a plaintiff would have begun investigating, we cannot accept Merck's argument. As a fallback, Merck argues that even if the limitations period does generally begin at "discovery," it should nonetheless run from the point of "inquiry notice" in one particular situation, namely, where the actual plaintiff fails to undertake an investigation once placed on "inquiry notice." In such circumstances, Merck contends, the actual plaintiff is not diligent, and the law should not "effectively excuse a plaintiff's failure to conduct a further investigation" by placing that nondiligent plaintiff and a reasonably diligent plaintiff "in the same position."
(5)
(6)
(7)
(8)
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(9)
We cannot accept this argument for essentially the same reason we reject "inquiry notice" as the standard generally: We cannot reconcile it with the statute, which simply provides that "discovery" is the event that triggers the 2-year limitations periodfor all plaintiffs. Merck further contends that its proposed "inquiry notice" standard is superior, because determining when a hypothetical reasonably diligent plaintiff would have" discover[ed]"the necessary facts is too complicated for judges to undertake. But courts applying the traditional discovery rule havelonghad to ask what a reasonably diligent plaintiff would have known and done in myriad circumstances. We conclude that the limitations period in 1658(b)(1) begins to run once the plaintiff did discover or a reasonably diligent plaintiff would have "discover[ed] the facts constituting the violation" whichever comes first. In determining the time at which "discovery" of those"facts" occurred, terms such as "inquiry notice"and "storm warnings" may be useful to the extent that they identify a time when the facts would have prompted a reasonably diligent plaintiff to begin investigating. But the limitations period does not begin to run until the plaintiff thereafter discovers or a reasonably diligent plaintiff would have discovered "the facts constituting the violation," including scienter. [Bold type added.]
(10)
(11)
i.
Guam law reflects the general rule that notice can be either actual or constructive. (1 GCA 718.) It defines constructive notice to include a duty of inquiry, but only when, consistent with the holding in the Supreme Court Merck case, a prudent man has actual notice of facts which would lead to the particular fact. Every person who has actual notice of circumstances sufficient to put a prudent man upon inquiry as to a particular fact, has constructive notice of that fact itself in all cases in which, by prosecuting such inquiry, he might have learned such fact. (1 GCA 719.) (1) Thus, under Guam law, the mere availability of a public record does not provide constructive notice because the knowledge of the availability of the record does not impart knowledge of any particular fact of wrongdoing revealed only by actual inspection. The constructive notice rule does not compel the citizenry to scour public records for information until there are other facts known which indicate there may be pertinent facts in the public record to reveal
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whether a citizens rights have been or could be wronged. (2) Thus, when a protest may be brought within 14 days after such aggrieved person knows or should know of the facts giving rise thereto (5 GCA 5425(a)), the predicate, pertinent fact required to be known by the person is that the person has been aggrieved. Until a person has (in the words of the definition of constructive notice mentioned above) actual notice of circumstances sufficient to put a prudent person upon inquiry that the person has been aggrieved, they have no constructive notice of that fact, whether the fact is publicly available or not. When bids are opened under Guam procedure, the only information required to be provided to the bidders is the amount and name of each bidder (5 GCA 5211(d)). The evaluation and determination of lowest responsive and responsible person comes later, following which notice of award is given to the successful bidder. As to unsuccessful bidders, they only get notified of the award (that is, simply notified of the fact of the award, not its substance) if the procurement is over $25,000. And as far as the wider public is concerned, they get no notice at all; it is simply made available. (2 GAR 3109(q).) There is, thus, no information provided to bidders generally that they may have been aggrieved by something wrong in a bid process. Certainly, knowing that a lower bid has been accepted does not impart any knowledge that a higher bidder has been wronged. Bidding is a contest of price, and there is no inference a prudent man could make to put him on notice that a wrong had been committed in the bid process by mere knowledge that a lower bid had been accepted. Without that knowledge of facts sufficient to reasonably suggest harm, a bidder should not be put to any duty to inquire further.
(3)
(4)
j.
It may be useful to further consider the policy implications of the strict constructive notice rule found in federal procurement cases, and the correlative inquiry notice rule reflected in Guams definition and articulated in the US Supreme Court Merck case discussed above. (1) The rationale for the federal constructive notice rule was stated in the Comptroller Generals Thomas May Construction matter discussed above: Bid protests are serious matters which require effective and equitable
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procedural standards assuring a fair opportunity to have objections considered consistent with the goal of not unduly disrupting the procurement process. In choosing the strict construction rule, the federal process has selected a policy choice that reflects the following: (a) First, it implies the government is less concerned about getting the process right as getting it on. If it is willing to use stringent procedural time barriers to prevent substantively meritorious claims it fails the purposes of Guams laws to ensure fair and equitable treatment. To be sure, it does allow a slim equitable estoppel rule to apply, and more importantly, it has significantly more professional and diligent internal review that Guam, so it may be granted some benefit of the doubt on this. Perhaps the federal government has so much competition from willing vendors that it can simply toss aside those who have not passed the white glove inspections. The federal governments policy choice reflects a system that is more reliant on internal policing than external policing. That is not the case on Guam. Second, the constructive notice rule compels bidders to distrust the government procurement staff to get things right. The constructive notice rule implies that you cannot rely on the government to correctly evaluate bids, therefore you, the bidder, must look over their shoulder at the bids yourself so that you can protest within the short period allowed; you cannot wait to see if the government actually gets it wrong to protest. And to the extent the constructive notice rule applies from bid opening, before notice of award, it compels all bidders to inspect and copy all bids as soon as bids are opened, a process that must be disruptive and costly to the government procurement staff. This policy choice does not sit well with the purpose of the Guam procurement law to provide for increased public confidence in the procedures followed in public procurement.
(b)
(2)
The inquiry notice reflected in Guams constructive notice statute and the Merck holding represents a policy more focused on pinpointed actual wrongdoing in the procurement process. (a) Given that Guam does not spend the huge amounts
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of money on its procurement staff and auditing processes that the federal government does, the inquiry notice policy choice reflects a focus on economics, and effective outsourcing the policing of local government procurement to the bidders who are actually aggrieved. It implies that, to make this policing effective, the government must effectively empower aggrieved bidders to bring their actions to highlight the things that are wrong, so that they can be corrected. (3) It should be noted that a great deal of the uncertainty arising from the technical timing question could be mitigated if the government simply adopted a regulation requiring the government to publish, or at least serve on all bidders, copies of all bids received and opened. Rather than playing games with legal definitions of what should be known, particularly in respect of the substance of bids, the government should just adopt a practice of actual notice. Such a practice could not be that much more expensive than replying to numerous requests for this or that bid from this or that bidder. (a) It might be noted, however, that this will possibly present its own procedural controversy. If an opened bid reveals that it is somehow nonresponsive, should other bidders be required to immediately protest, or should they be allowed or required to await evaluation and actual award to see if the government acts on the nonresponsiveness or overlooks it and makes award on the nonresponsive bid? Under Guam law, the bidder with knowledge of a nonresponsive bid cannot protest based on that fact alone; that bidder must wait until it has knowledge of sufficient facts to suggest it may be aggrieved before protesting. If the nonresponsive bid is ultimately rejected or bypassed for award, the other bidders are never aggrieved by the nonresponsive bid in the first place.
7.
Note possibility of 30 day filing period for initiating a protest action in the Superior Court. a. 5 GCA 5480(a) offers the possibility of initiating a protest action directly in the Superior Court rather than with the agency. That section confers jurisdiction over an action between the Territory and a bidder, offeror, or contractor, either actual or prospective, to
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determine whether a solicitation or award of a contract is in accordance with the statutes, regulations, and the terms and conditions of the solicitation. Further, 5 GCA 5425(g), in establishing the automatic stay, recognizes the possibility of bringing a protest directly to the court: In the event of a timely protest [to the agency] ... or under Subsection (a) of 5480 .... b. 2 GAR 9109 (1)(a) allows any such action to be initiated within 30 days after the aggrieved person knows or should have known of the facts giving rise to the action. This would seem to allow an aggrieved person who has missed the 14 filing deadline with the agency to at least take the matter to court. (1) But, as discussed elsewhere (see, Article XVIII.E.4), the cards are stacked against protestors in court actions due to their deferential standards of review, so the case had better be pretty clearly egregious. On the other hand, consider 5 GCA 5245 and the authors suggested case for restricting court deferential standards of review for most procurement issues, particularly the review of bid protests by the Courts, as discussed in Article XXIII.B below.
c.
5 GCA 5481(a) requires a 14 day filing limit after receipt of a final administrative decision. It says nothing about the time for bringing a protest. Thus, unless 5481(a) is meant to imply a restriction on bringing protest actions to the court, despite the clear language of 5480(a), it appears this avenue of protest is open to a protestor who has missed the 14 day agency protest time but still within the 30 time limit to bringing a protest action in court.
H.
The third key take-away is that if you miss a deadline to file a protest (or appeal), absent extreme and unjust circumstances (see equitable tolling discussion in Article XVIII.D.3 dealing with appeals, below), you will have a snowballs chance on Guam of ever getting it heard. 1. Cibinic and Nash note that Federal agencies have some leeway for considering protests filed after the 10 [14] day filing limit. (P 1486.) The Model Regulations (R9-101.03) contain the Editorial Note: Jurisdictions may wish to allow consideration of protests filed after [14 days] for good cause shown. If so, Section 9-101(a) (Authority to Resolve Protested solicitations and Awards, right to Protest) [5 GCA 5425(a)] of the statute and this Subection [of the Regulation, 2 GAR 9101(c)(1)] should be amended accordingly. a. In Guams case, there has been no such amendment: query the effect on preclusion of an equitable estoppel/tolling argument. The
2.
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author believes that valid protests are the only real-time checks on procurement errors or misdeeds, and that any facially valid protest should be allowed some flexibility, for good cause shown, for filing past the 14 day limit to protect and promote the integrity of the procurement process. This would particularly be the case when time has elapsed due to reasonable reliance on administrative responses to Requests for Reasons or dialogue over complaints. This is, however, a hotly contested opinion and should not be relied upon absent definitive more legislative or judicial support than now exists. I. Request for Reasons for Rejection of Bid: 1. Generally, unselected bidders/offerors are given no reason for rejection or non-selection in the notice of award. a. Written notice of award shall be sent to the successful bidder. In procurement over $25,000, each unsuccessful bidder shall be notified of the award. (2 GAR 3109(q), applicable only specifically to IFBs.) A record showing the basis for determining the successful bidder under an IFB must be made part of the procurement file, which is a public record, but that basis does not need to be disclosed in the notice of award. (See, 2 GAR 3109(p).) (1) In L.P. Ganacias, CV 1787-00, supra, the Judge took pains to point out several deficiencies in the bid process in that case, in an effort to ensure that such do no [sic: not] occur in future.... (At page 20.) Among the deficiencies in that case was the failure of the agency to document the written determination demonstrating the basis upon which the decision was made to award the bid. (At page 24.)
b.
c.
A similar requirement for a record (but no notice) justifying the selection of the best qualified offeror must also be made for RFPs (2 GAR 3114(m)) and for justifying a finding of unacceptability in the first phase of multi-step sealed bids (2 GAR 3109(t)(4)(c).
2.
However, 2 GAR 3115(e)(4) provides a specific authority for any rejected bidder or offeror to request reasons why the bid was rejected: [u]pon request, unsuccessful bidders or offerors shall be advised of the reasons therefor. 2 GAR 3115(e)(3) sets out, broadly, the legal bases for rejecting a bid or a proposal/offer.
3.
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a.
The three legal bases specifically (but not exclusively) allowed to reject a bid are: (1) The business that submitted the bid is nonresponsible. (a) And here there is another transcription error in the Procurement Regulations, which, though specifically referring to Determination of Nonresponsibility, incorrectly says the business is nonresponsive. Note that the corresponding Model Regulation says nonresponsible (MPR R3-301.03(a)(i)), and even the Guam version, which says nonresponsive, specifically refers to the regulation dealing with standards and determination of responsibility.
(2) (3)
This bid is not responsive. Or, The supply, serve or construction item does not meet the specifications or other acceptability criteria. (a) Note that this last reason is redundant to the not responsive reason above, given that any bidders offering which does not meet the acceptability requirements shall be rejected as nonresponsive. (2 GAR 3109(n)(3).)
b.
The three legal bases specifically (but not exclusively) allowed to reject a proposal (offer) are: (1) The business that submitted the proposal is nonresponsible (and here the Guam law got the word transcribed correctly). The proposal ultimately (after any opportunity has passed to alter or clarify) fails to meet the announced requirements in some material respect (i.e., was nonresponsive). Or, The proposed price is clearly unreasonable.
(2)
(3) c.
See In the Appeal of Latte Treatment Center, Inc., supra, which made the close observation that an offeror under an RFP who is not selected for award was not rejected; rather LTCs proposal was not selected. That is an interesting distinction, but is it one with a difference? Sub 3115(e)(4)(B) specifically says [r]easons for rejecting proposals include the ones noted above.
4.
Although sub (e)(3) calls these reasons and not legal bases, the author is of the view that sub(e)(4), which allows parties to request and be
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advised of the reasons for rejection, requires some advisement of the facts upon which the rejection is based, particularly when the party requesting had an apparent good shot at the award, and especially since the government is supposed to make a record of that. 5. The regulations speak of no time limit within which to lodge your Request for Reasons. The statement is often heard that an agency need only provide minimal justification in its notice of award rejecting other bidders, and that is consistent with the requirement regarding mere notice of the award. However, the author would argue that this specific provision allowing a rejected bidder to request reasons necessarily implies an obligation to provide more substantive detail for the rejection, when requested. Such a rule would be consistent with the polices to provide increased public confidence, ensure fair and equitable treatment of all persons who deal with the procurement system, to provide safeguards, and to require public access to all aspects of procurement. It would also further the goal of exhaustion of administrative remedies (see Article XXIII.D.5) by disclosing facts at the agency level upon which a protest can be substantively heard, so as to alleviate the burden on the appeals process. A Request for Reasons would not usually constitute a Bid Protest, since if you know the facts by reason of which you may be aggrieved, you should protest. When in doubt as to whether you are or should be protesting, submit your Protest within the 14 day protest filing period even if you have a pending Request for Reasons. You can always withdraw a protest filed in good faith, but cannot belatedly file a protest when you knew or should have known of the facts, and are merely using the Request for Reasons to try to get the government to acknowledge its error. Even if your Request for Reasons does not claim expressly to be a protest, the government may respond to your request as though it were a protest. A good indication the agency believes your Request is a Protest is if, in their response, they notify you that you have a right to administrative and judicial review. You should carefully review the response for just such a determination, because your protest filing period starts from the decision on a protest. That is why it is good practice to specifically state in your Request that it is not meant to be a Protest.
6.
7.
8.
J.
Format of Protest 1. First, distinguish between a complaint and a protest. You can complain about a grievance to the CPO or the officer who issued the solicitation verbally, but a protest is not a mere complaint; is more formal and must be in writing and described as such. (The distinction is made clear in 2 GAR 9101(b) and (c).) You cannot appeal from a complaint, only a protest.
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a.
Thus, like a Request for Reasons discussed above, an informal attempt to reveal or understand the nature of an award can trap the unwary by allowing too much time to pass before a formal protest is filed. Bidders must take formal steps to protest if they truly wish to preserve their review rights. The precise form of the bid protest is not defined and can be in a simple letter format, but must be in writing, should positively declare it is a protest, and include, at a minimum (2 GAR 9101(c)(3).): (1) (2) name and address of the protestor; appropriate identification of the procurement, and, if a contract has been awarded, its number; a statement of reasons for the protest; and supporting exhibits, evidence, or documents to substantiate any claims unless not available within the filing time in which case the expected availability date shall be indicated. To expedite handling of protests, the envelope should be labeled Protest. Technically, the protest shall be delivered in duplicate.
b.
(3) (4)
(5)
c.
A very recent OPA Appeal, In the Appeal of Eons Enterprises Corp., OPA-PA-10-003, presented an excellent opportunity for the Public Auditor to examine what kind of communication from a rejected bidder might constitute a protest. (1) In this appeal, the government agency defended the appeal on the basis that no protest was ever filed. The government contended that the only filing was a mere perfunctory request for a re-evaluation of the award which did not constitute a protest. (a) The Appellants letter said simply, We respectfully request for consideration for re evaluation of the bids ... due to the fact that we submitted the lowest bid.... (See, Appellees Memorandum of Points and Authorities in Support of Motion to Dismiss.) The Appellant argued that it complied, or substantially complied, with the requirements of a bid protest.
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(b)
(c)
The government brought a motion to dismiss the appeal, but the Hearing Officer denied the motion, ruling that the letter was more than a complaint and satisfied the requirements to be a protest.
(2)
The author is, respectfully, not convinced by the argument advanced to deny the motion to dismiss, but, it must be said in defense of the Decision, for reasons that were not briefed and argued by the government. The Hearing Officers Decision on the motion said it was unreasonable to interpret the letter as an informal complaint and not a protest. The Hearing Office said the agency owed a duty of good faith to seek clarification rather than speciously treating the letter as a complaint. (a) As much as the author would desire such a rule (being employed in the private sector), he has to admit that there does not appear to be anything in the law or regulations or case law which would draw such a long bow. At least not until this Decision. If this rule is followed, it is hard to imagine any communication which an agency could safely dismiss as not being a protest. It would require almost all communications to be potential protests, requiring the agency to affirmatively tease out, or clarify, the meaning of the communication.
(3)
(b)
(4)
The regulations note that there are various kinds of communications that might be made to an agency, only one of which is a protest. Regulations speak specifically of protest, complaint, request for reconsideration and request for reasons, all as discussed elsewhere in this Article; there are likely other categories of communication, as well, such as disagreement and abuse without formally challenging the decision, e.g., what were you thinking?. (a) The Decision denying the motion to dismiss focused on only two of the forms of communication: protest and complaint, implying it had to have been characterized as one or the other. It ignored the more critical type of communication which the letter most closely resembled, request for reconsideration.
(5)
The law, 5 GCA 5425(a) gives an aggrieved bidder the

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right to protest. Neither the word protest nor any variation on the word was used anywhere in the short letter. Protest means something more than dissent. The authors New World Dictionary of the English language defines dissent to connote a difference or rejection of opinion, but protest connotes strong opposition, disapproval or objection. (6) The Maryland State Board of Contract Appeals, operating under the same pertinent law as Guam, has considered the matter. (a) In Appeal of Energy Management Systems, MSBCA No. 1769, December 21, 1993, the alleged protest was a communication from a losing bidder which, fairly read, suggested the chosen bidder did not meet specifications. It said, it appears impossible that their product can approximate the performance characteristics so clearly defined in the specification. (At p 3.) The agency said there was no protest. i) The Board agreed and dismissed the appeal for lack of jurisdiction. The Board reasoned, [w]hile no specific words of protest are required, the writing must reach a level of confrontation sufficient to put a reader on reasonable notice it is offered as a complaint. Procurement Officers receive many letters and other written material in regards to solicitations. The vast majority of the letters constitute puffing, or provide information, comments, criticisms and suggestions. The Procurement Officer must, and does, have the authority to decide how to reasonably manage this material since otherwise every letter would be potentially a protest and the procurement process would cease. It is not unduly burdensome on a protestor to state with clarity its intent.... The protestor should not be timid in his protest but rather make formal accusations or state their displeasure in a manner calculated to clearly reflect an intent that the award should be set aside or altered to correct the error, impropriety or other basis of award. (At pp 5-6.) Speaking to the concerns of good faith conduct in the Hearing Officers Decision in
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ii)
the Eons case, and the equities argued by the Appellant, the Board specifically noted, [a]t first glance the result seems draconian. However, a bid protest effectively stops the procurement process and is not an action taken likely. ... The Procurement Officer should not have to guess or speculate if a letter is a protest or not. Requiring the protestor to express its protest in language which places a reasonable reader on notice a complaint is intended is not unduly burdensome. (At p 6.) (b) Likewise, in The Appeal of National Science Corporation, MSBCA No. 2052, April 8, 1998, the Board ruled a fax communication which said, [w]e would be grateful if youd review your records and make amends, did not rise to the level of confrontation sufficient to constitute a protest. (P 3.)
(7)
Much was made, in the Eons Appeal of the language of the regulation that the envelope in which the communication is made should say protest, but, since that is not a mandated requirement, that discussion is beside the point. What is noteworthy that the government did not respond by saying the letter was an informal complaint; it merely said it was not a protest. (a) While not specifically seeking a protest, the Appellants letter did very explicitly ask only for a reevalution of the bids. This is a kind of communication recognized by the procurement regulations, which is also distinguished from a protest, i.e, a request for reconsideration of a decision. (2 GAR 9101(h)(1); see further discussion in this Article below.) A request for re-evaluation is patently more akin to a request for reconsideration than protest, given the facts of this case. The agency promptly responded to the request for re-evaluation, advising it evaluated the bids in detail and remained firm in its decision, which is more consistent with the requirements of 9101(h)(1) than 9101(c). It is not sufficient, therefore, to find that the letter was more than an
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(8)
(b)
informal complaint without further considering the more logical interpretation that it was a request for reconsideration, which is also not a protest. (9) The matter has dismissed by stipulation of the parties, with concurrence of the Public Auditor, which includes an undertaking to rebid the solicitation. Since that may draw another protest from the selected bidder, time will tell the ultimate outcome of this matter.
2.
The issue of ambiguous protest has also been presented in other jurisdictions where an appeal has been dismissed because, in the course of complaining, the time lapsed in which to file a protest. (See, Appeal of Midtown Stationery & Office Supply Co., MSBCA No. 1461, June 26, 1990.) a. It is good practice, therefore, to explicitly frame any written objection to the solicitation as a protest to preserve your appeal rights, and to realize that oral communications, including discussions with procurement officers, do not constitute a protest.
3.
Bear in mind that you must protest every issue you know about (or should know about) because you cannot add additional issues later (unless, of course, you do not discover the facts upon which the additional protest is based until later, in which case you should bring a separate protest on those matters). (See the Decision in In the Appeal of Guam Publications, Inc., OPA-PA-08-007, at III. A., beginning p 6.) a. In the GCIF Appeal, OPA-PA-09-005, the Public Auditor held that issues concerning a lease contemplated in an RFP could not be considered on appeal where they were not raised in the protest. The reason given was that, since the issue was not raised at protest, there was no protest decision rendered on the issue to provide the jurisdictional basis for OPA review. The author agrees with the result in this case under general principles of judicial economy but suggests the jurisdiction of the Public Auditor extends to any matter properly submitted in connection with a solicitation or protest, which would include ancillary matters not specifically raised prior to the appeal, particularly given her mandate to use her jurisdiction to promote the integrity of the procurement law. (5 GCA 5703; see discussion of Jurisdiction of the Public Auditor in Article XVIII.E.3 below.) Consideration of such matters also invokes consideration of judicial economy by assuring, without requiring endless protests, consideration of matters discovered or arising during the course of the protest. Thus, the author suggests there is no bright line rule but, rather, an analysis of what the nature is of the additional matter submitted, how critical it may be to promoting the integrity of the procurement law, when discovered, etc.
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4.
In the GCIF Appeal, supra, the Public Auditor noted that protests should include supporting evidence of basis for the protests, but since the evidence was contained in a procurement record which was not then available for public inspection, the failure to include such documentation in the protest did not render the protest invalid. You are encouraged to review the various Procurement Appeals files published on the Office of Public Accountabilitys website, noted above. Click on the Documents Filed link in each appeal case and a drop-down menu of filed documents is presented. Most protest letters are attached to the Notice of Appeal, and are also supposed to be included in the Agency Report, though the full contents of all Agency Reports are not always online (they are available for review in the Public Auditors office).
5.
K.
RESOLUTION OF THE BID PROTEST 1. Bid protests are intended to be settled and resolved, where possible, by mutual agreement, which implies an informal dialogue. (5 GCA 5425 (b) and (c).) Information required by either party from the other should be rendered expeditiously (2 GAR 9103(d).). a. The Procurement Act specifically states that the authority to resolve and settle disputes is to be exercised in accordance with regulations promulgated by the Policy Office. Unfortunately, there have been no regulations promulgated which are actually aimed at facilitating dispute resolution. (See, 2 GAR, Div. 4, Chpt 9, 9101, et seq.) Curiously, there are no Model Regulations to use as a fallback or guidance, either, except by analogy. The analogy lies in the Model Code and Regulations regarding the settlement and resolution of contract disputes (see, 2 GAR 9103; MPC 9-103; MPR R9-103.) The model those rules suggest is one of unstructured due process notions of fairness and opportunity to be heard. (1) 2 GAR 9103(a)(1) says, It is the territorys policy, consistent with this Act [sic], to try to resolve all controversies by mutual agreement without litigation. In appropriate circumstances, informal discussion between the parties can aid in the resolution of differences by mutual agreement and are encouraged. If such informal discussions do not resolve the controversy, individuals who have not participated substantially in the matter in controversy may be brought in to conduct discussion if this is feasible. Independent committees and panels which review controversies expeditiously and informally with a view to fair settlement possibilities also are encouraged at this stage.
b.
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(2)
Commentary No. 2 to MCP 9-103 states, regarding the exercise of the authority to settle contract controversies: This may avoid unnecessary litigation and often is essential for fair treatment of parties.... On the other hand, some safeguards are needed. Limitations upon the power to settle, including prerequisite approvals, should be established by appropriate regulation.
c.
In the authors experience, it is rare for there to be any dispute resolution procedure with an agency other than a written response; and, too often, not even that. It is the authors impression that agencies feel they cannot, in good justice, discuss anything with a protestor. In the cases of the authors experience where the Government has actually instigated a discussion to resolve the protest, issues have been narrowed or avoided altogether. To encourage an agency to mutually try to resolve a protest without suggesting you are trying to side-step the procurement process, one suggestion is to express your willingness, in your protest letter, to enter into a discussions to resolve the matter, as contemplated in 5 GCA 5425(b).
2.
Parties to the Protest: There is no direct statement in the law or regulations as to who the parties are in a protest. It would obviously involve the agency and the protestor, but what about other bidders, prospective or otherwise? Do they have any part to play? The answer to these questions requires some guidance and some guesswork. (1) Guidance comes from the commendable practice of procurement staff to notify all bidders of the imposition of the automatic stay resulting from a protest, as well as puzzle pieces involving interested party in the regulations and general notions of due process. An interested party is defined as meaning an actual or prospective bidder, offeror, or contractor that may be aggrieved by the solicitation or award of a contract and who files a protest. (2 GAR 9101(1)(a).) Based on this definition, only a protestor can be an interested party. (a) That definition is, however, a bastardization of the Model Procurement Regulations, which distinguish between a protestor and an interested party; indeed, that definition is the exact Model Regulation definition of a protestor, not an interested party (see, R9-101.01.2).
(2)
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(b)
Model Regulation R9-101.01.1 defines an interested party to mean an actual or prospective bidder, offeror, or contractor that may be aggrieved by the solicitation or award of a contract, or by the protest.
(3)
Any interested party is entitled to receive from the Agency any information bearing on the protest, unless proprietary or otherwise confidential. (2 GAR 9101(f).) Under the Model Regulation definition, this would give other bidders who may be aggrieved by the protest the opportunity to be heard (i.e., due process) in the protest deliberation. The Guam version would seem to preclude this; but shouldnt due process prevail, nevertheless? In addition to the protestor, [r]econsideration [of a protest] can also be requested by ... any interested party who submitted comments during the consideration of the protest.... (2 GAR 9101(h)(1).) (a) This provision, which closely follows the Model Regulation as to this particular language, suggests two conclusions: i) Guam regulations do indeed intend to distinguish between protestor and interested party despite the clumsy (and all too frequent) transcription of definitions from the Model; and, An interested party is contemplated as having the due process right to notice and opportunity to be heard in the protest action.
(4)
ii)
(5)
Further bolstering the argument that other interested parties (in the Model Regulation sense) are proper parties to a bid protest dispute resolution process is 5 GCA 5425(d), which requires notice of the protest decision to be given to the protestant and any other party intervening. The author would advise any non-protesting interested party who receives notice of a bid protest to move post haste to notify the agency of their interest and any contrary position they may have to the protest. In procurement process as in life, there is a definite difference between the quick and the dead.
(6)
3.
Bid protests decisions are meant to be rendered in writing as expeditiously

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as possible (2 GAR 9101(g)(1)) and promptly (5 GCA 5425(c)). a. The Public Auditor has determined, in In the Appeal of [IBSS], OPAPA-08-003, that she has the power to compel an Agency to issue a decision on a protest when the agency fails to act to render one, under her authority to promote the integrity of the procurement process (5 GCA 5703). In that case, the protester also filed a Request for Decision with the Agency after the Agency failed to render a decision promptly or expeditiously, and that Request was also ignored. The Public Auditor found, in the circumstances of that case, that the failure of the Agency to render a decision on the protest was an act of bad faith which denied the protestors due process rights. See the Petition of Town House Department Stores, Inc., dba Island Business Systems & Supplies, OPA-PA-09-011, brought to compel GSA to render a Decision on a Protest when the decision was not forthcoming after ten weeks. This matter further involved the question whether an agency response which fails to address all issues raised in a Protest is a decision. The Public Auditor did not address this question because the agency (GSA) thereafter rendered a response fully addressing each issue raised, and the Petition was dismissed. Compare the Procurement Regulations of the Guam Supreme Court, which require a written decision within fourteen days, and if not given in that time, the aggrieved party may proceed as if an adverse decision had been given. (Sections 10 (B) and (C), http://www.guamsupremecourt.com/PromOrder/images/PromOrder No03-007AmendProcurementRules101703.pdf )
b.
c.
4.
The three formal requirements of a decision are (5 GCA 5425(c)): (1) (2) (3) It must be in writing, and It must state the reason for the action taken, and It must inform the protestant of its right to administrative and judicial review.
5.
The protester may be entitled to the reasonable costs incurred in connection with the solicitation and protest, including bid preparation costs, excluding attorneys fees, when a protest is sustained and the protesting bidder or offeror should have been, but was not awarded the contract under the solicitation. (2 GAR 9101(g)(2).)
L.
Requests for Reconsideration of Protest Decision

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1.
2 GAR 9101(h) allows a protester or any agency or interested party who submitted commits during the protest to request that an Agency reconsider its initial decision, as mentioned above in the discussion regarding parties to the protest. This request for consideration must be made within 15 days after receipt by the protester of the decision (id.). This is a potential trap for the unwary because of an inconsistency between this regulation and the law: law does not expressly take that 15 day time period for reconsideration into consideration when determining the time limits required for filing an Appeal. a. In TRC Environmental Corporation SP 160-07, supra, the protester followed up with further correspondence which, on writ to the Superior Court, it tried to argue was a request for reconsideration. The Court held it was not such a request, because, among other things, it was not labeled as such, but instead was labeled a Letter of Protest. The Court suggests (at page 6), had it been properly framed as a request for reconsideration, it might have tolled the 15 day filing period (it was not a request for reconsideration and thus no tolling occurred). Note also that the Court suggested that the tolling period to consider a request for reconsideration would not start anew, but would include the time between the protest decision and the date of the request for reconsideration (at page 7). And note: If for any reason the agency reopens a matter and, after reconsideration, issues a new and final order, that order is reviewable on its merits, even though the agency merely reaffirms its original decision.... The new order is, in other words, final agency action and as such, a new right of action accrues and starts the running of a new limitations period for judicial review. (Quoted with approval in Pacific Security Alarm (Pacific Security Alarm, Inc. v DPW, Guam Superior Court CV 0591 - 05, Decision and Order Denying Motion to Dismiss, p3.) As noted above, there is a pending OPA appeal almost directly on the point of this discussion. (See, In the Appeal of Eons Enterprise Corporation, supra.) The Appellant did not formally protest, but sought a re-evaluation of the agencys protest decision, which was denied. Appellant has appealed from that denial, and the agency is contending the request did not qualify as a protest.
2.
b.
c.
3.
Note some differences between the Guam version regarding Requests for Reconsideration (2 GAR 9101(h)(1)) and the Model Regulation (R9101.08). The Model version requires a 10 day filing period (vs. 15 days in Guam version), and the Model version specifically acknowledges (R9101.08.3) the agency may uphold the previous decision or reopen the
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case.... The author believes Guams failure to make such an express acknowledgment does not carry any implication to negate such action, particularly since the Guam Compilers note to the Guam version states: SOURCE: Modified to provide fuller procedure.
XVII.
THE AUTOMATIC STAY A. Once a protest is filed, the government can take no further action on the solicitation or award of contract (unless the stay is lifted as mentioned below). This is called the automatic stay, and is essentially an injunction. 1. In the event of a timely protest ... the Territory shall not proceed further with the solicitation or with the award of the contract prior to final resolution of such protest .... (5 GCA 5425(g).) a. Note that the stay only covers the solicitation and award. It does not apply to stay performance of a contract that has already been entered into. Thus, the automatic does not take effect once the award is made. (Guam Imaging Consultants, 34.) See, also, the discussion of the timing of an award in the Article on Appeal Remedies, below. 2 GAR 9101(e) makes it explicit that the protest must be filed before an award is made to make the automatic stay effective: When a protest has been filed ... before an award has been made.... Although a protest appeal to OPA can continue after an award, failing to obtain and maintain an automatic stay from the time of protest through appeal has a dramatic impact on the effective remedies available to a such a protestor, which, as discussed in Article XIX.C below, depend on whether the appeal decision is made before or after an award. (5 GCA 5451, 5452.)
b.
c.
2.
Final resolution would seem to include awaiting the outcome of an Appeal after the protest. (See, In the Appeal of [IBSS], OPA-PA-08-012, at pp 9-10.) However, that does not appear to be the case. There is a fateful gap in the automatic stay, from the time of the protest decision until the time an Appeal to OPA has been filed in which the Territory might proceed with award, which could substantially prejudice a protestor, as discussed in the remedies section, Article XIX.C.4 below. a. Beware this gap between the decision on the protest and the time you file an appeal to OPA. There is nothing to prevent the Government from proceeding to award a contract between the time of its decision on the protest and the filing of an Appeal. (See,
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Decision, In the Appeal of Guam Publications, Inc., OPA-PA-08007, at p 18; TRC Environmental Corporation SP 160-07.) b. In L.P. Ganacias, CV 1787-00, supra, (at page 25) the Judge found most troubling the fact that the agency awarded a contract prior to receipt by the other bidders of the notice of award, which precluded the possibility of protesting, and thereby staying, the award. The Judge stated, [c]ertainly a party cannot protest a bid award unless or until that party has been informed that the contract was awarded to another bidder. For an agency to attempt to circumvent this process by first awarding the contract, and then later informing the other bidders that their respective bids were rejected is highly improper. The parties should be informed in writing that their respective bids were rejected and the basis for such rejection.... The agency should then proceed to award the contract.
B.
Any further action to proceed with a solicitation or award during the period of the automatic stay is void UNLESS all of the following approvals are given (5 GCA 5425(g) : 1. The CPO or Director DPW after consultation with and written concurrence of the head of the using or purchasing agency and the Attorney General or designated Deputy Attorney General, makes a written determination that the award of the contract without delay is necessary to protect the substantial interests of the Territory; a. Note that this implies both the existence of a substantial interest as well as a necessity to override the strong policy reasons for and prophylactic effect of the automatic stay; a showing of substantial interest, on its own, is not sufficient to set aside the stay. Where an agencys own regulations do not require the AGs concurrence, the Procurement Act prevails, and the agencys substantial interest determination is invalid without that concurrence. (Guam Imaging Consultants, Inc., p 16.) But note: the Public Auditor shall review and confirm or reject any determination by the Chief Procurement Officer or the Director of Public Works that award of a contract without delay pending Appeal is necessary to protect the interests of the government. (2 GAR 12501(b).) It is unclear whether this express directive is intended to be self-enforcing or only applicable in the event of a timely protest of the decision to lift the stay, as next mentioned. Nevertheless, this regulation does preclude an agency from issuing a substantial interest declaration before a protest can be or is filed to avoid OPA review of the determination.
b.
c.
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2.
And, absent a declaration of emergency by the Governor, the protestant has been given at least 2 days prior notice (to allow a protest on the determination to the Public Auditor; see step # 3(b) below); And, either: a. If the protest is pending on Appeal to the Public Auditor or Court, the Public Auditor or Court has confirmed such determination; OR If no protest Appeal is pending, no protest to the Public Auditor over the determination made in step # 1 above is filed prior to the expiration of the 2 day notice mentioned in step # 2 above. This would allow an appeal to OPA by a protestor to contest the substantial interest determination even if it has not appealed the decision on the protest.
3.
b.
4.
Recall the policy of the Procurement Act to provide for increased public confidence in the procurement procedures, and that the MPC commentary declares that [t]his can best be assured by allowing an aggrieved person to protest.... (5 GCA 5001(b)(3), as discussed in the Purposes and Policies Article, above.) Since the protestor has little incentive to protest after an award is made due to the limited nature of the remedies available in that case (discussed in Article XIX.C.4 below), a decision to lift the automatic stay by confirming a declaration of substantial interest should require a critical determination and high burden of proof.
C.
The general provisions of Guam Procurement Law regarding the automatic stay and by extension, anything else override any inconsistent provisions of an Agencys own regulations. (Guam Imaging Consultants, Inc., v. Guam Memorial Hospital Authority, Guam Supreme Court, 2004 Guam 15 at 24, 41.) Thus, where an agency fails to obtain the Attorney Generals confirmation of a determination of necessity to lift the automatic stay, even where that confirmation is not required by its own regulations, the agency has failed to make the proper showing of such necessity. (Id., 41.) A trial court order denying a request to enforce the automatic stay is the equivalent of an order refusing to grant a preliminary injunction. (Id., 14.) Lifting the Automatic Stay; confirming a Declaration of Substantial Interest: 1. The first Appeal to present OPA with an application to lift the automatic stay by a request from an agency to confirm its substantial interest declaration is In the Appeal of Guam Community Improvement Foundation, Inc., (vs DPW) OPA-PA-09-005, referred to here as the GCIF Appeal. (Another appeal has also been brought by another protestor in the same solicitation, which will also involve the same issue. See, In the Appeal of Guam Education Financing Foundation, Inc., OPA-PA-09-007.)
D.
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2.
In the GCIF Appeal, the Public Auditor declined the Request to Confirm the Declaration of Substantial Interest; that is, she refused to lift the automatic stay. (See, Decision and Order for Confirmation...) a. As mentioned below in Article XVIII.E.4 discussing Appeals to the OPA, the OPAs standard of review of any matter properly submitted to her is de novo. In the GCIF Appeal, the Public Auditor confirmed that standard (at p 5), denying a challenge from the Attorney General, representing the government agency, that she should be deferential to the agencys declaration of substantial interest. She then engaged in a critical examination of the declaration of substantial interest. In the GCIF Appeal, the government agency, DPW, compiled an impressive array of letters from the Department of Education and others, including its own statements, declaring that the reconstruction of the JFK Tamuning High School was vitally urgent to meet the governments mandates to provide an adequate education to the displaced JFK students in the unusually short time frame required by special legislation authorizing the RFP which was appealed in that case. The Public Auditor, in essence, recognized the mandates as a substantial interest, but ruled that the mere presence of urgency and substantial interest did not, by themselves, constitute the required showing of necessity to lift the automatic stay when other alternatives, besides proceeding with award, are available to mitigate the pressing needs and interests of the government. (1) She said, [a] determination that a substantial interest is merely involved is not sufficient. [Citation omitted.] Instead, the determination of substantial interest must specifically identify the government interest and articulate why it is necessary to protect those interests and award the contract without delay. (GCIF Appeal, Decision and Order for Confirmation, id, p 7; emphasis added.) In short, she said that the automatic stay should not be lifted unless the government could sufficiently establish necessity to avoid the stay. (Id.) Recall the requirement of 5 GCA 5425(g)(1): ... that the award of the contract without delay is necessary to protect substantial interests .... The Public Auditor found the government failed to sufficiently establish that necessity because the government had other alternatives, other than simply pressing on with the award, to address and mitigate the substantial interests. Her specific findings included (pp 8 et seq.):
b.
c.
(2)
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(a)
This three month delay [in the OPA Appeal], by itself, will not prevent the project from being completed in time for the 2010-2011 school year. The government has the ability to provide an adequate education to the JFK students in other DOE schools, including a temporary facility especially acquired by the government for that purpose. She implied any obstacle to providing adequate education facilities, to the extent that condition exists, was the result of an arbitrary decision of DOE to keep the JFK student body together during the interim rather than disburse them to other available facilities. If there is a delay, it was substantially the fault of DPW and the offeror trying to secure financing rather than the automatic stay, and could have been mitigated by considering other offerors who offered proposals that did not require a delayed financing process. The government did not provide proof of its bare substantial interest declarations that it would suffer increased costs, credit reputation losses, or other such damages.
(b)
(c)
(d)
3.
The Federal government procurement regime contains a similar automatic stay provision, and the principles applicable to the automatic stay in that context are useful to analyze Guams Model Act automatic stay, particularly because there is plentiful law analyzing the Federal automatic stay, whereas there is a dearth of law in the Model Code context. The Federal automatic stay provision, and the principles and standards applicable to it, were exhaustively discussed in the October 2008 US Court of Federal Claims case, E-Management Consultants, Inc. v. US, No. 08-680 c. Although the principles are similar, the actual procedural differences between the Guam automatic stay, discussed above, and the Federal automatic stay ought to be understood. a. The Guam stay is an integral part of the original Procurement Act. In the Federal situation, the automatic stay was grafted onto the Federal procurement process by the Competition in Contracting Act of 1984 (CICA), codified as amended at 31 U.S.C. 355156 (2006). (1) Under both Guam law and CICA, however, the automatic
4.
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stay prevents an agency from proceeding with a solicitation upon the timely filing of a protest of the solicitation. b. The chief differences between the two automatic stays lies in the process and the standard of review of a decision to effect the stay. (1) First, The CICA stay can be overridden by an agency, and any such override is then subject to a review; in contrast, as noted above, the OPA review is an integral condition of any agency determination taken to lift the stay. Second, a review of a Federal stay is facially different depending on whether the review is pre- or post-award; in contrast, the automatic stay in Guam law is, in practical effect, only applicable to a pre-award situation. (a) In a pre-award situation under the Federal automatic stay, the test of whether the agency override will be allowed to stand is whether the stay override was justified by urgent and compelling circumstances. In a post-award situation, the test is also whether there were urgent and compelling circumstances, but alternatively, may be determined on the basis of whether the override was in the best interests of the United States. (See Cibinic and Nash, p 1506.) Thus, the Federal automatic stay can be applied to cease performance of a contract already awarded; Guams automatic stay does not apply to contracts, that is, post award situations. i) Note that Guam law requires a determination that lifting the stay is necessary to protect the substantial interests of the Territory, and query whether that is a significantly different standard from the Federal in the best interests test. The author believes, for purposes of analysis, the test of best interests would suffice for determining substantial interest because if a best interest determination is allowed, certainly a lesser substantial interest would be included.
(2)
(b)
(c)
In either event, the E-Management decision said (at footnote 7), As noted in Superior Helicopter LLC v. United States (Superior Helicopter), The precedents addressing these considerations deal equally with
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override determinations made on both best interests and urgent and compelling circumstances bases. Thus, in practice, the standards applicable in analyzing the override or lifting of a stay are the same, whether dealing with a pre- or post-award case; whether the test is urgent and compelling circumstances or best interest. (3) Third, the standard of OPA review of the automatic stay provided for in 5 GCA 5425(g), is de novo and no determination of substantial interest by the agency shall be final or conclusive on the Public Auditor. (5 GCA 5703; the GCIF Appeal, supra.) Thus, the Public Auditor is invited to substitute her judgment for that of the agency. (a) In contrast, the Federal standard of review is highly deferential to agency determinations, being whether a federal agencys decision is arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law. (E-Management, supra.) This is a critically important difference and explains many of the uncritical results of the Federal court where the agency override is allowed to stand. In discussing the Federal standard of review, the EManagement decision adopted the language of prior decisions (see pp 5-7): The arbitrary and capricious standard applicable here is highly deferential. This standard requires a reviewing court to sustain an agency action evincing rational reasoning and consideration of relevant factors. It added, In particular, the reviewing court may not substitute its judgment for that of the agency. (Citations omitted.)
(b)
5.
However, even under the arbitrary and capricious standard of review which it was bound to, the E-Management decision outlined the tests the Federal courts use to determine if the automatic stay may be lifted by an agency override decision. If these tests are declared to be apt under a deferential standard of review, they are certainly instructive guides for determining, under the OPAs independent de novo standard, the efficacy of an agencys determination of substantial interest. The following tests are expressly identified in the E-Management decision (pp 6-9.): a. Generally, under the APA, the court analyzes whether an agencys decision was arbitrary and capricious by considering whether the
6.
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agency: (1) [1] relied on factors which Congress has not intended it to consider, [2] entirely failed to consider an important aspect of the problem [i.e., the Reilly Wholesale factors; see sub (b) immediately below], [3] offered an explanation for its decision that runs counter to the evidence before the agency, or [4 rendered a decision that] is so implausible that it could not be ascribed to a difference in view or the product of agency expertise.
(2)
(3)
(4)
b.
This court has also identified factors which elaborate the important aspect[s] of the problem factor of Motor Vehicle for the CICA context [citing ultimately to Reillys Wholesale Produce v. United States, 73 Fed. Cl. 705, 711 (2006); thus these 4 factors often considered in the courts override cases are referred to as the Reillys Wholesale factors]: (1) (1) whether significant adverse consequences would occur if the agency did not override the stay, (a) In the GCIF Appeal, supra, the Public Auditor found the government agency did not provide proof of its alleged adverse consequences related to claims of increased costs, etc.
(2)
(2) whether reasonable alternatives to the override were available, (a) In the GCIF Appeal, supra, the critical findings upon which the Public Auditor denied confirmation of the Declaration of Substantial interest had to do with the availability of reasonable alternative.
(3)
(3) how the benefits of overriding the stay compared to the potential cost of the override, including costs associated with the potential that the protester might prevail before GAO, and , (4) the impact of the override on the competition and integrity of the procurement system.
(4)
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c.
The court has also identified factors which Congress did not intend for an agency to consider in the override context. Reillys Wholesale, 73 Fed. Cl. at 711 (finding that some reasons for using the override mechanism are simply inconsistent with the apparent rationale for the override process and should not be considered). Importantly, the governments decision to override the stay cannot be merely that the new contract is better or that the agency prefers to use the override mechanism instead of seeking alternative contracting options. (1) In the GCIF Appeal, at p 17, the Public Auditor suggested that the delay caused by the time it took for the best qualified offeror to obtain financing could have been mitigated if it had reverted to the next best qualified offeror(s) (who had apparently offered unqualified financing).
d.
In order fully to identify the relevant factors in an override case, the court considers the objectives behind the automatic stay provision in CICA. ... The automatic stay provision appears to the court to be the keystone that ensures that the various provisions of CICA work to promote competitive contracting. ... The automatic stay is the enforcement mechanism of the GAO protest scheme. ... Any override of the automatic stay must be viewed in light of the importance of the automatic stay to the general scheme that Congress enacted in CICA. Quoting from a US House of Representatives report on the CICA automatic stay, the E-Management decision said, The act also establishes, for the first time in statute, a strong enforcement mechanism through which contracts are held in abeyance while contractors appeal to the General Accounting Office [now Government Accountability Office] (GAO) when they believe they have been unlawfully denied the opportunity to compete for the award of Government contracts. Congress included these bid protest provisions to help ensure that the mandate for competition would be followed and that vendors wrongly excluded from Federal contracts would receive fair relief. (1) The decision added, The 1985 House Report stated that, Congress fully recognized that a major deficiency in the existing bid protest process was the inability to stop a contract award or contract performance while a protest was pending. ... As a result, vendors were confronted with a fait accompli and often did not receive fair and equitable relief even when GAO decided in their favor. . . . [The automatic stay was included [in CICA] to preclude such faits accomplis and to facilitate a fair and equitable remedy to vendors who
e.
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are illegally denied Government contracts. ... The automatic stay forestalls agency investment in awards subsequently disapproved by GAO. f. Adding further instruction, the E-Management decision proceeded to a critical examination (as did the Public Auditor in the GCIF Appeal) whether the agency decision in that case was arbitrary or capricious under the four-factor Reilly Wholesale test, taking each factor in turn (pp 9-16): (1) The first factor to consider is whether the agency analyzed whether significant adverse consequences will necessarily occur if the stay is not overridden. ... NHTSA failed to address whether ... the adverse consequences will necessarily occur. [Underlined emphasis in original.] ... The court notes that NHTSA fulfils an important public policy goal of the United States by its funding of transportation safety grants and that information technology (IT) is an important factor in carrying out the grant program. ... However, attaining this goal does not give NHTSA license to disregard federal procurement law, especially those provisions that are designed to ensure fair competition. (a) Note, the Guam automatic stay is also subject to a necessary test (5 GCA 5425(g)(1); the GCIF Appeal, supra).
(2)
The necessity of engaging the awardee is closely related to the second factor: whether the agency considered reasonable alternatives to overriding the automatic stay. See id. (noting that the second factor is an alternative way of considering the first factor). If the agency had reasonable alternatives to engaging the awardee, adverse consequences to the agencys mission would not necessarily result from the stay. Here, NHTSA has shown some possible adverse consequences of not having an IT contractor but, in light of the possible availability of reasonable alternatives, the OM does not support the conclusion that such consequences would necessarily occur if NHTSA did not override the automatic stay. ... The lack of evidence of a serious exploration of options for obtaining temporary IT services appears to the court to veer close to, if not to reach, NHTSAs failing to consider an important aspect of the problem. Motor Vehicle, 463 U.S. at 43. (a) The failure of the government to consider the available reasonable alternatives was critical to the
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Public Auditors refusal to confirm the governments declaration of substantial interest in the GCIF Appeal, supra. (3) The third factor is whether the agency considered how the potential cost of proceeding with the override, including the costs associated with the potential that the GAO might sustain the protest, compare to the benefits associated with the approach being considered for addressing the agency's needs. ... The court views this factor in light of CICAs legislative history. The legislative history of CICA states that the agencies should consider the costs of GAOs sustaining the protest before it issues an override: ... This is to insure that if the Comptroller General sustains a protest, such forms of relief as termination, recompetition, or re-award of the contract will be fully considered for recommendation. Agencies in the past have resisted such recommendations on the grounds that the governments best interest would not be served by relief measures of this sort because of the additional expenses involved. [The automatic stay] is designed to preclude that argument.... The OMs cost-benefit analysis is flawed. First, the OM identifies the costs of GAOs sustaining the protest as reprocurement costs. AR 2. These are not the only costs of the override. One additional cost for an agency to consider is the cost to the integrity of the procurement system. ... Furthermore, the OM determined that, because NHTSA has a reasonable chance of prevailing on the merits, the cost of the override was low. Id. This is an impermissible consideration. This type of balancing would allow an agency to employ the very reasoning that CICA sought to prevent. (In footnote 10, the decision noted, These arguments may well be reflective of problems of the governments own making. If the government had pursued alternatives, it could have mitigated this problem.) (a) Note that relief forms such as cancellation of the solicitation or revision to comply with Guam are only assured to a successful protestor in a pre-award situation. Post-award, the successful protestor can still lose out to another vendor, even if that other vendor engaged in fraud. (More on that below, under appeal remedies.) This reality should be considered when deciding to lift the automatic stay.
(4)
The final factor is whether the agency considered the impact of the override on competition and the integrity of
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the procurement system, as reflected in the Competition in Contracting Act. Defendant claims to have considered the impact on competition and on the integrity of the procurement process in the OM. AR 2. However, the OM failed to offer any reasoning that shows that it actually considered the integrity of the procurement system Congress created in CICA. ... The court finds that NHTSA, by failing to consider the impact of its override on the procurement system, has failed to consider an important aspect of the problem, Motor Vehicle, 463 U.S. at 43, and has, therefore, failed to act rationally and in accordance with law. NHTSAs Override Memorandum fails to meet even the deferential standards of APA review and the court must set aside the override. (a) Given that the automatic stay is, in effect, an injunction, note the Rhinocorps case, herein below, to the effect that denial of a protestors opportunity to engage in a fair solicitation is irreparable harm supporting a claim to an injunction of the solicitation.
7.
Another judge of the US Court of Federal Claims has followed the rationale of the Reilly factors and other caes cited in E-Management, in Nortel Government Solutions, Inc., v. USA, No. 08-682C (2008), another stay override case. Here, the procurement dispute had been dragging on over two years. The government sought to override the stay, claiming both urgent and compelling circumstances and best interests. The Court stated (at p 9), While frustration with the prolonged nature of this solicitation is understandable, it alone is not sufficient justification to override the stay. The Court found the action of the agency to proceed with the contract was an attempt by defendant to circumvent the competitive process by exactly the type of action Congress intended the automatic stay provision of CICA to prevent. ...Moreover, defendant does not consider the impact of its override decision on competition at all. Ultimately, the publics interest in a fair, competitive federal procurement system outweighs unsubstantiated claims, even those related to the public safety. [Citations omitted] (P 10.) Furthermore, The Court has already concluded that defendants assertions with regard to the necessity of overriding the stay amount to nothing more than defendants strong preference to begin performance of the protested contract. ... Defendant has therefore failed to establish that overriding the stay is in the best interests of the United States. (P 11.) a. Note the Guam test must consider the effect of delay of award and make the determination that award without delay is necessary.
8.
It must be acknowledged that the E-Management analysis has not won over
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all judges of the US Court of Federal Claims. In a terse and unadorned decision, Planetspace Inc. v. USA, No. 09-0099C, the Judge stated, without citation to or mention of the E-Management case, Plaintiff offered arguments regarding four factors courts normally consider in deciding whether to grant an injunction. It contended that NASA did not consider four additional Reilly factors in making its decision. See Reillys Wholesale Produce v. United States, 73 Fed. Cl. 705, 711 (2006) (listing factors an agency must consider in making an override decision based upon urgent and compelling circumstances.). We did not consider the Reilly factors at the hearing because Congress limited the courts review of an agencys decision in a CICA override action to the Administrative Procedure Act standards. a. Even so, the Planetspace decision does not detract from the efficacy of the Reilly factors analysis in the less deferential standard of review applicable to an OPA confirmation of substantial interest, particularly since it specifically departs from the E-Management result solely and expressly on the limited arbitrary and capricious standard of review.
E.
Consider an ordinary stay 1. The stay of an award or contract performance in procurement action is a critical procedural issue, bearing directly on the ability of a protestor to obtain any practical relief. a. See the discussion below in Article XIX.C.2 on the appeal remedies available to a protestor after a successful appeal (5 GCA 5450) of the protest: if the award of contract has been made, even if the protestor wins the appeal by showing irregularities in the procurement, the OPA can confirm the contract, even where the person awarded the contract acted fraudulently or in bad faith. (5 GCA 5452.) However, if the protestors appeal is decided before an award is actually granted, solicitation, including any proposed award, must be cancelled or revised to comply with the law. (5 GCA 5451.) Note also the discussion of the Federal automatic stay in the EManagement case, above, where it was said the stay is necessary so that, vendors wrongly excluded ... would receive fair relief. It also noted the Legislative history of the Federal stay to the effect that the automatic stay forestalls agency investment in awards subsequently disapproved. The case decided the stay was a keystone to promoting the competitive contracting goals of the procurement system; that is, promoting the integrity and the purposes of the procurement law.
b.
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2.
The author has, perhaps incorrectly, detected a rush to award in some procurements following the rejection of a protest. As pointed out by the Guam Publications appeal, and noted in this Article above, the automatic stay does not work to prevent award or stay a contract made between the time of the protest conclusion and the filing of an appeal on the protest. Such action could severely affect the remedies of a deserving protestor, even if the filing of the appeal is timely. Given the critical importance of an automatic stay and its role in maintaining the purposes of the procurement law, the author would suggest that it is within the power of the Public Auditor to also stay, on application, any award of contract or performance of the contract, pending appeal, under her mandate to promote the integrity and purposes of the procurement law (see discussion in Article XVIII.E.3 below), in the same manner and for the same principles as applicable to the Federal stay applications. Of course, the application for such a stay should be filed posthaste. a. In puzzling over the question why the automatic stay does not expressly extend to post-award issues, even though protest and appeal may be had over issues concerning the award, the author has only been able to conclude that there might be a hesitancy in the law to allow any action by the executive (in reviewing the award) which may be construed as an impermissible interference with its own contracts. He cannot conceive any other possible explanation. Such a rationale, however, is inconsistent with the administrative powers of the agency or the Public Auditor to declare a contract void, as contemplated in 5 GCA 5452(a)(2). On the other hand, it may simply be the intent or result of the statutory automatic stay (5 GCA 5425(g)) that a stay of contract performance not be automatic, and that any action to stay the postaward contract should be effected by procedural due process, administrative or judicial. The jurisdiction of the Public Auditor extends to determining de novo any agency decision, including a decision regarding the award. (5 GCA 5703.) Since the Public Auditor is given the jurisdiction to determine if the award is proper, she should be able to maintain the status quo pending the determination upon consideration of factors that a court would consider when presented with an application for a preliminary injunction. Such power is entirely consistent with the directive of the law to use her jurisdiction to promote the integrity and purposes of the procurement process. (Id.)
3.
b.
c.
d.
4.
Should the Public Auditor demurrer to imposing such a stay, the author
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would suggest seeking a judicial stay (injunction) which also specifically remands the appeal to the OPA for decision, to retain both the expertise of the OPA and the standards of review under which the OPA operates. (See, 2 GAR 12103(b).) a. Under 5 GCA 5480(a), the Superior Court of Guam shall have jurisdiction over an action between the Territory and a bidder (and offeror or contractor, actual or prospective), to determine whether a solicitation or award of a contract is in accordance with the statutes, regulations, and the terms and conditions of the solicitation. It also explains the action can be in equity and obtain declaratory or other equitable relief. To elaborate, 5480(c) makes it clear that other equitable relief, and remedies allowed, includes injunctive relief. (1) Teleguam Holdings, LLC dba GTA Telecom, vs General Services Agency, BSP and Pacific Data Systems, Guam Superior Court, SP 0050-10, involved an action to obtain a temporary and permanent injunction to restrain the government from taking any action to implement a contract awarded by a contested solicitation. The case arose from the GTA Telecom OPA Appeal, OPA-PA-10-002 after the government successfully moved the Public Auditor to recuse herself from the OPA Appeal. The Judge declared jurisdiction was properly laid in 5 GCA 5707(a), 5480(a) and 5480(c), but it should be remembered this action is a direct action in the court and not an appeal from an OPA decision. She allowed the temporary restraining order, thereafter conducting an Evidentiary Hearing. Ultimately, the Court found that the award was improperly made because the contractor had not met specifications of the IFB, but held, under the facts of the case, it was in the best interests of the Territory to nevertheless affirm the contract. While this action took place subsequent to the award, it suggests that an application for injunction brought before award might also be entertained.
(2)
(3)
b.
As discussed in Article XIX.B, a protestor, even a successful protestor who does not get the contract award, has no effective remedy for damages beyond bid cost recovery. This legal limitation has been cited in Federal case law to justify injunctive relief on the basis that there is no adequate remedy in law, thus proceeding with solicitation before the protest is finally determined would constitute irreparable harm.
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(1)
[C]ourts have found consistently that the loss of an opportunity to compete for a contract on a level playing field sufficiently establishes irreparable harm. An action at law only allows recovery of bid preparation costs in a suit for damages, but not loss of anticipated profits, leaving a bid protestor irreparably harmed. Bannum Inc. v. United States, 60 Fed. Cl. 718, 730 (2004) (denying permanent injunctive relief), affd, 404 F.3d 1346 (Fed. Cir. 2005) (quoting Essex Electro Engrs, Inc. v. United States, 3 Cl. Ct. 277, 287 (1983), affd, 757 F.2d 247 (Fed. Cir. 1985)). (Rhinocorps Ltd Co. v. USA, supra, __ Ct.Cl. __, No. 08410C (2009), p. 9.)
c.
On the other hand, the Supreme Court of Alaska, in James Weed et al. vs Bachner Company Inc., and Bowers Investment Company, discussed infra, has held that its procurement laws provide a comprehensive remedial scheme which does provide an adequate remedy at law. Should a judicial stay be sought, the applying party might consider the usefulness of the authors conjecture regarding the appropriate judicial standard of review, as discussed in Article XXIII.B.4, below, which is based on his reading of 5 GCA 5245. 5 GCA 5480(d) specifically references that section and its implied standard of review for particular factual and legal procurement determinations.
d.
F.
In any event, dont lose sight of the fact that a protest or appeal is not made late or invalid simply because a stay is not available. Lack of a stay does not affect the substantive efficacy of a protest or appeal. The lack of a stay merely affects the remedies available post-award, and even in that regard, it is not determinative: it does not mandate confirmation of award, only allowing confirmation.
XVIII. APPEALS OF BID PROTESTS TO THE PUBLIC AUDITOR A. Sound procedures and honest staff, while essential, are not sufficient to contain corruption in public procurement. Effective and swift review of major procurement decisions in response to complaints from aggrieved bidders is just as important in a procurement system that is well protected against corruption. Thorough control of the procurement process and its outcome by auditors, supervisory bodies, and the public must complement this review, to prevent and uncover corruption and collusion. Complaint and review mechanisms fulfill two functions in curbing corruption. They allow involved bidders and the public to verify the conformity of individual decisions with the established rules and bolster trust in the fairness of the
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procedures. Sound verification procedures also have an important preventive role: the possibility that decisions can be overturned renders corrupt practices more difficult and therefore constitutes, together with credible sanctions, a strong incentive to respect the procedures. The effectiveness and functioning of both these control mechanisms depend on the availability of complete and reliable documentation of the proceedings from procurement planning to implementation. (Public Procurement Asia Pacific, supra, Part 1.4.) B. Prerequisites of Appeal are Protest and Decision: A decision by an Agency may be appealed by the protestant, to the Public Auditor within fifteen (15) days after receipt by the protestant of the notice of decision. (5 GCA 5425(e).) Thus, to file an Appeal there must be: 1. First, a protest to the Agency (see, Request for Dismissal of Appeal, In the Appeal of [IBSS], OPA-PA-06-004, based on IBSS failure to protest, and In the Appeal of Mega United, supra). a. As mentioned above in the discussion of bid protests (Article XVI.J.1 ), a mere complaint is not a protest. You must formally lodge a protest to be entitled to an Appeal.
2.
Second, a decision on the protest (see, In the Appeal of [IBSS vs GPSS(1)], OPA-PA-08-003, discussed above as to the Public Auditors power to compel a decision). a. In the Teal Pacific Appeal (09-002) the Appellant argued that the protest decision was improper because it failed to specifically notify Appellant of its right to appeal. That issue was not decided. Note Appeal of Midtown Stationery & Office Supply Co., MSBCA No. 1461, June 26, 1990, which held that a procurement officers response to a mere inquiry did not constitute a decision, so the review board lacked jurisdiction to hear an appeal based on that response. By the same reasoning, a request for reasons for rejection of the bid, mentioned above, would not necessarily constitute a protest, thus would not normally serve as the basis for an Appeal. (1) See, Notice of Appeal in In the Appeal of J&G Construction, OPA-PA-007-05, where question of jurisdiction to Appeal from a response to a Request for Reasons (that also specifically reserved a right to protest) was noted by Appellant but was not considered an issue on Appeal.
b.
c.
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C.
BY THE PROTESTANT: Although an interested party may have a role in the protest dispute as discussed above, only the protestant/protestor can appeal to the Public Auditor (5 GCA 5425(e): ... may be appealed by the protestant....). Thus, if an interested party in the bid protest is dissatisfied by the protest decision, its choices are to then protest to the agency and appeal to the Public Auditor from any adverse decision from the agency, or contest the solicitation or award of contract directly to the Superior Court under 5 GCA 5480(a). 1. Although an interested party may not appeal, if an Appeal is taken by the protestor, the interested party is expressly granted the right to appear and be heard in the Appeal, as discussed below. Appeals to the OPA are administrative in nature and not Civil Actions; nor are the rights or procedures of the Guam Rules of Civil Procedure applicable. (See, 5 GCA 5701, et seq., and 2 GAR 12101 et seq.)
2.
D.
15 Day Filing Deadline for Appeal: The Appeal must be filed within 15 days of receipt of the decision on the protest. The filing deadlines for Appeals (and protests) tend to be strictly enforced. (The appeals board lacks authority to waive a late filing even where no party would be prejudiced by the waiver: Appeal of Acme Market #6762 and #6845, No. 1763, (MSBCA) Dec. 23, 1993. See, TRC Environmental Corporation SP 160-07, at page 5.) 1. The period allowed for filing an appeal or a request for review is usually short to speed up the procedure. For the review process to be credible and effective, however, the aggrieved party must be given time to verify the facts and to estimate the potential risks and benefits of lodging an appeal; allowing enough time for filing also helps avoid premature and unfounded complaints. The period of filing in some countries is so short as to put in question the effectiveness of the review and due consideration of the merits of the appeal ... Costs can also discourage aggrieved parties from applying for review. In the Philippines, a non-reimbursable fee of at least 1 percent of the contract value is charged for administrative review. (Public Procurement Asia/Pacific, supra, Part 1.4.) The question of timeliness vs jurisdiction. The claim is often made, and sometimes upheld in cases, that a time limit specified in a statute is of such fundamental significance that, if the time limit is violated, there is no right to enforce by way of a claim or action. That is, in these cases it is said that time is jurisdictional. Other times, the assertion is made, and sometimes upheld in cases, that the time limit is only that: an obstacle to be overcome to press a right of action. So why is this an important distinction? a. If the issue of time is jurisdictional, where there is an out-of-time claim made, there is no right to enforce the claim. A party simply has no right to claim once the time lapses. One significant
2.
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consequence of this is that any action taken by a court to advance a claim is empty; without jurisdiction a court is powerless to act at all. And a further consequence is that the question of jurisdiction, being absolute, can be raised at any time by any interested party, even the court. So, even if a case has gone to trial, if it is found that a jurisdictional time limit has been missed, the whole case is dismissed. b. If the issue of time is not jurisdictional, however, the time deadline is considered simply a barrier to enforcing the claim of right and the question of the timeliness of an action has other consequences. In the case of a lapsed jurisdictional time limit, the right no longer exists, but in the case where time is considered merely a barrier, the right does exist except that the action to enforce the right may be barred. Importantly, if no one objects soon enough about the time lapse factor (and the courts in this instance are not charged to protect this factor since it does not affect jurisdiction), then the right of action can proceed; the party objecting to the lapse of time is considered to have waived the defense of the time limit, or is equitably estopped to challenge the infraction. Furthermore, the party who was late may be able to raise evidence of just cause which caused or contributed to the late action, which may excuse the missed deadline under the equitable principle of equitable tolling. If you, by this time, wonder why some time limits are jurisdictional and others mere barriers, you would not be alone. Even the US Supreme Court has admittedly contributed to the problem, and been imperfectly clear in sorting it out. (1) In Arbaugh v. Y & H Corp., 546 U.S. 500 (2006), the US Supreme Court said (in part III of the Decision): (a) "Jurisdiction," this Court has observed, "is a word of many, too many, meanings." This Court, no less than other courts, has sometimes been profligate in its use of the term. For example, this Court and others have occasionally described a nonextendable time limit as "mandatory and jurisdictional." But in recent decisions, we have clarified that time prescriptions, however emphatic, "are not properly typed 'jurisdictional.'" ... On the subject-matter jurisdiction/ingredient-of-claim-for-relief dichotomy, this Court and others have been less than meticulous. ... We have described such unrefined dispositions as "drive-by jurisdictional rulings".... (Citations and internal quotations omitted.)
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c.
d.
The Guam Supreme Court, following the lead of the US Supreme Court in the Arbaugh Decision, has held that statutory requirements for stating a cause of action are not all jurisdictional. In particular, in Castino v. G.C. Corp., 2010 Guam 03, the Guam Supreme Court ruled that a statutory requirement that a claim be verified was not jurisdictional, given no explicit statutory direction, and the failure to verify a claim did not divest a court of jurisdiction to hear a claim where there was substantial compliance adequate to give notice of the claim. An excellent current review and summation of the various US Supreme Court examinations of the jurisdiction vs barrier issues is presented by the Court of Appeals for the District of Columbia in Menominee Indian Tribe Of Wis. v. U.S.A (D.C. Cir., 2010), discussed below.
e.
3.
Equitable Tolling: Although strictly enforced generally, non-jurisdictional statutory time limits (statutes of limitations) are subject to the notion of equitable tolling, which allows the filing period to be effectively extended in a particular case if a filing party was diligent but untimely due to unjust or other equitable considerations. (See the Guam Superior Court case, TRC Environmental Corporation SP 160-07, at page 6: Limitations periods can be tolled on an equitable basis, especially if the government has engaged in trickery.) a. The US Supreme Court, in Holmberg v. Armbrecht, 327 U.S. 392 (1946), stated the general rule on statutes of limitation: (1) If Congress explicitly puts a limit upon the time for enforcing a right which it created, there is an end of the matter. The Congressional statute of limitation is definitive. The rub comes when Congress is silent. Apart from penal enactments, Congress has usually left the limitation of time for commencing actions under national legislation to judicial implications. (At p 395; citations omitted.) Traditionally and for good reasons, statutes of limitation are not controlling measures of equitable relief. Such statutes have been drawn upon by equity solely for the light they may shed in determining that which is decisive for the chancellor's intervention, namely, whether the plaintiff has inexcusably slept on his rights so as to make a decree against the defendant unfair. There must be conscience, good faith, and reasonable diligence, to call into action the powers of the court. (At p 396; internal quotations and citations omitted.)
(2)
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(3)
Equity eschews mechanical rules; it depends on flexibility. ... And so, a suit in equity may lie though a comparable cause of action at law would be barred. (At p 396.)
b.
Subsequently, the US Supreme Court expanded the general rule applicable to statutory time limitations. (1) In Irwin v. Department of Veterans Affairs, 498 U.S. 89 (1990), the Supreme Court held that the 30-day filing limitation for a discrimination claim was not jurisdictional and is subject to equitable tolling. It said: (a) Federal courts have typically extended equitable relief only sparingly. We have allowed equitable tolling in situations where the claimant has actively pursued his judicial remedies by filing a defective 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. Because the time limits imposed by Congress in a suit against the Government involve a waiver of sovereign immunity, it is evident that no more favorable tolling doctrine may be employed against the Government than is employed in suits between private litigants. (Internal footnotes and citations omitted.)
(2)
More recently, in Holland v. Florida, No. 09-5327, _ S. Ct. _ (2010), the US Supreme Court held that a statutory time limit for filing a Writ of Habeas Corpus was non-jurisdictional and subject to equitable tolling. The Court further explained: (a) We have previously made clear that a nonjurisdictional federal statute of limitations is normally subject to a "rebuttable presumption" in favor "of equitable tolling." "It is hornbook law that limitations periods are `customarily subject to "equitable tolling"'". (Citations, internal quotations omitted.)
(3)
Importantly, the Holland decision indicated what was required to overcome the presumption in favor of equitable tolling.
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(a)
[T]he statute here differs significantly from the statutes at issue in two cases in which we held [the] presumption had been overcome. In Brockamp, we interpreted a statute of limitations that was silent on the question of equitable tolling as foreclosing application of that doctrine. But in doing so we emphasized that the statute at issue (1) "se[t] forth its time limitations in unusually emphatic form"; (2) used "highly detailed" and "technical" language "that, linguistically speaking, cannot easily be read as containing implicit exceptions"; (3) "reiterate[d] its limitations several times in several different ways"; (4) related to an "underlying subject matter," nationwide tax collection, with respect to which the practical consequences of permitting tolling would have been substantial; and (5) would, if tolled, "require tolling, not only procedural limitations, but also substantive limitations on the amount of recoverya kind of tolling for which we ... found no direct precedent." And in Beggerly we held that Irwin's presumption was overcome where (1) the 12-year statute of limitations at issue was "unusually generous" and (2) the underlying claim "deal[t] with ownership of land" and thereby implicated landowners' need to "know with certainty what their rights are, and the period during which those rights may be subject to challenge." (Citations omitted.)
c.
In a recent government contract dispute, the US Court of Appeals for the District of Columbia considered the application of equity to statutes of limitations in Menominee Indian Tribe of Wisconsin v. United States of America, No. 09-5005, (D.C. Cir.) decided July 30, 2010 (Pacer citation: http://pacer.cadc.uscourts.gov/common/opinions/201007/09-5005-1 258183.pdf ). The district court dismissed a breach-of-contract claims of a government contractor, concluding they were barred by the statute of limitations. The Court of Appeals reversed. (1) The Court characterized the stance of the case in these terms:
(a)
The Contract Disputes Act of 1978 (CDA), 41 U.S.C. 601 et seq. (2006), established a comprehensive framework for resolving contract disputes between executive branch agencies and government contractors.
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i)
Note the similarity with which the Guam Supreme Court characterized the Guam Procurement Act in Pacific Rock I, infra: It is clear that in the Procurement Law the Legislature wisely envisioned a comprehensive, detailed scheme for settlement of contract controversies before proceeding to court. Moreover, ... the statute contains provisions dealing with judicial and administrative relief and language providing for limitations on actions...
(b)
The government filed a motion to dismiss for lack of subject-matter jurisdiction and for failure to state a claim. The district court lacked jurisdiction over the claims for 1996, 1997, and 1998, the government contended, because Menominee had not filed those claims with the contracting officer until after the six-year limitations period in the CDA had expired. Menominee asserted that principles of equitable tolling excused the lateness of its claims. The District Court declined to equitably toll the filing deadline, reasoning that "[s]tatutory time limits are jurisdictional in nature, and courts do not have the power to create equitable exceptions to them."
(2)
The Court of Appeals decided the case in these terms (with most internal quotations and citations omitted): (a) Filing deadlines, statutory or not, are generally nonjurisdictional. It is anomalous to classify time prescriptions, even rigid ones, under the heading 'subject matter jurisdiction. Subject matter jurisdiction defines the [tribunal's] authority to hear a given type of case. The Supreme Court has distinguished between prescriptions that may be "properly typed 'jurisdictional,' and those better classified as "claim-processing rules,". A claim-processing rule may serve to inform a plaintiff of the time he has to file a claim, or to protect a defendant's case-specific interest in timeliness, but it "does not reduce the adjudicatory domain of [the] tribunal. The different treatment of claim-processing rules and
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(b)
(c)
jurisdictional requirements has significant effects on the scope of authority held by adjudicatory tribunals. Claim-processing rules "typically permit [tribunals] to toll the limitations period in light of special equitable considerations," John R. Sand, 552 U.S. at 133, and their protection can be "forfeited if the party asserting the rule waits too long to raise the point" Kontrick, 540 U.S. at 456. (d) Whether a statutory time limit or other prerequisite to suit is jurisdictional is "discerned by looking to the condition's text, context, and relevant historical treatment." Reed Elsevier, Inc. v. Muchnick, 130 S. Ct. 1237, 1246 (2010). We begin by considering whether Congress "clearly state[d]" the limitation should "rank... as jurisdictional." Arbaugh v. Y & H Corp., 546 U.S. 500, 516 (2006). If so, our inquiry is over. Id. at 515-16. If, on the other hand, the limitation "lacks a clear jurisdictional label," we then ask whether the structure of the statute or long-standing judicial precedent "compel[s] the conclusion that... it nonetheless impose[s] a jurisdictional limit." Muchnick, 130 S. Ct. at 1244. The time limit for initiating a claim under the CDA is not stated in jurisdictional terms. Section 605(a) provides that all claims by a contractor "shall be in writing"; "shall be submitted to the contracting officer for a decision"; and "shall be submitted within 6 years after the accrual of the claim." The statute does not "refer in any way to... jurisdiction," so we must turn to its structure and history. The government also makes a broader argument: that 605(a) "run[s] for the benefit of the Government" and this type of time limit has "long been considered jurisdictional." The government has it precisely backwards. Irwin v. Department of Veterans Affairs established a "general rule" that time limits for suing the government are presumptively subject to equitable tolling, 498 U.S. 89, 95 (1990), and therefore nonjurisdictional. The government's categorical argument that statutes of limitations running for the benefit of the Government are jurisdictional in nature lacks merit. Finally, the government argues that the limitations
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(e)
(f)
(g)
period in 605(a) is jurisdictional because it facilitates administrative review and promotes judicial efficiency. That may be so, but such virtues do not make the limitations period jurisdictional. Many time limitations including claimprocessing rules serve "system-related goal[s] such as facilitating the administration of claims," John R. Sand, 552 U.S. at 133. A limitations period should not "be ranked as jurisdictional merely because it promotes important congressional objectives." Muchnick, 130 S. Ct. at 1248 n.9. Because the time limit in 605(a) is not jurisdictional in nature, the district court erred in dismissing Menominee's claims for lack of subject-matter jurisdiction. (h) Because Menominee failed to meet the filing deadline and the government has not waived or forfeited its defense of untimeliness, such a dismissal would be proper unless the limitations period can be tolled. We now turn to that question. We agree that the statute is subject to [equitable] tolling and remand for the district court to consider whether tolling is appropriate in this case. "It is hornbook law that limitations periods are customarily subject to equitable tolling unless tolling would be inconsistent with the text of the relevant statute." Young v. United States, 535 U.S. 43, 49 (2002). Indeed "a nonjurisdictional federal statute of limitations is normally subject to a rebuttable presumption in favor of equitable tolling." Because the time limitation in 605(a) is nonjurisdictional and actions for breach of contract are familiar to private litigation, we must presume that 605(a) is subject to equitable tolling. The only question that remains is whether there is "good reason to believe that Congress did not want the equitable tolling doctrine to apply." The requirement that all claims "shall be submitted within 6 years after the accrual of the claim," 41 U.S.C. 605(a), reads like a run-of-the-mill statute of limitations. ... The government describes the CDA as "a detailed, technical, complex scheme that sets forth precise procedures and deadlines for the assertion of a claim." Be that as it may, the
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(i)
(j)
(k)
government's focus on the regulatory scheme as a whole is misplaced. d. The Guam Supreme Court has expanded the holding in its Castino v. G.C. Corp. decision to statutory time limits, consistent with the US Supreme Court decisions noted above, holding that the statutory time limit for filing a mechanics lien is not jurisdictional. See, Core Tech. Int'l Corp. v. Hanil Eng'g & Constr. Co., 2010 Guam 13. (1) It might then be expected that the Guam Supreme Court would also follow the Irwin and Holland US Supreme Court line of authority to adopt the rule that statutory time limits for suing the government are presumptively subject to equitable tolling. Indeed, the Guam Supreme Court has already held, in the case of private litigants, that the doctrine of equitable tolling may be applied to contract limitations. See, GHURA v. Dongbu, supra. (a) In this regard, the observation made by the US Supreme Court in Scarborough v. Principi, 541 U.S. 401 (2004) (at p 404) is illuminating: limitation principles generally apply to the Government in the same way they apply to private parties.
(2)
e.
The Public Auditor has indicated an inclination to stretch the time limit to file (equitably toll) an Appeal if the Agency has clearly misled the Appellant about the nature or existence of a possible grievance. (See, In the Appeal of [IBSS vs GPSS(2)], OPA-PA-08011, at p 9 and following.) In the Teal Pacific appeal (09-002; dismissed when the Public Auditor recused), the Appellant has argued that an agency response to protest which does not include a notice of right to review, tolls the filing period because such a failure is a denial of due process. The Appellant claims it received notice of the decision on April 7th and filed its appeal April 28th , 21 days later. The Appellant relied on two Guam Superior Court cases to support its claim. Conveniently, copies of the two case are attached to the Notice of Appeal. (1) In the first, Pacific Security Alarm (Pacific Security Alarm, Inc. v DPW, Guam Superior Court CV 0591 - 05), the notice informing Appellant its protest was denied added you have the right to seek administrative and judicial review. Appellant petitioned the court for review 17 days after receipt of the decision (but, because of the weekend,
f.
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effectively only one day late). The agency responded to the petition, motions were allowed and then cut off, and the case was set for trial. The agency only raised the filing deadline issue a year later, one week before trial. (a) The Court reviewed and relied upon Guam Supreme Court cases in holding that filing deadlines generally (and particularly in the case of protest appeals) are limitations issues and not jurisdictional, and thus they are subject to equitable tolling. (Decision and Order Denying Motion to Dismiss, pp. 3-4.) The Court held, since there was at that time no avenue for administrative review, and the notice failed to advise the appropriate action to take for judicial review, that the filing deadline in that case was equitably tolled until the petition was actually filed. The Court held that the statute of limitations is an affirmative defense and the failure to promptly raise the issue until just before trial was prejudicial to the petitioner. The Court observed it was misleading to notify the protestor that it had a right to administrative review, given there was no administrative review then possible . Those issues are no longer problematic, given the full possibility of review to OPA. The author believes this particular case was decided on broad equitable tolling notions and the specific facts of this case, and that it did not establish any bright line, ipso facto, due process rule.
(b)
(c)
(d)
(2)
In the second case, Sumitomo Construction Co., Ltd. v. DPW, (SP 074-98, Decision and Order, Michael J. Bordallo, Nov. 16, 1998), the Court ruled that, substantively, the petition for writ of mandate would fail. Therefore, in the authors view, the courts additional finding of a need to notify a protester of its right of review was uncontrolling dicta and not strongly supportive of the Appellants argument.
g.
In In the Appeal of Guam Pacific Enterprises, Inc. (OPA-PA-09-003), the Public Auditors Decision relied entirely on Federal law to declare (at p. 7) categorically, [t]he Public Auditor is required by the applicable law to strictly adhere to statutory time limits and has no
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discretion to consider personal circumstances or equity. Time provisions for filing an appeal are considered jurisdictional and cannot be waived. This would appear to contradict both the US Supreme Court and Guam Supreme Court case law noted above, but might be explained by the confusion found in earlier Guam Supreme Court cases, principally in the two Pacific Rock cases: (1) Pacific Rock Corporation v. Dept. of Education, Pacific Rock I, 2000 Guam 19, involved a contract dispute. The Guam Supreme Court expressly departed from Federal case law, saying (at 16), [i]n Ciesiolka v. San Nicolas [citation omitted], the District Court of Guams Appellate Division followed the Ninth Circuits rich tradition of strictly construing claims statutes. ... We do not agree. Pacific Rock I was in part reversed by a subsequent review of the issues in Pacific Rock Corporation v. Dept. of Education, Pacific Rock II, 2001 Guam 21. (a) Pacific Rock II distinguished cases brought under the waiver of sovereign immunity statutes, such as breach of contract actions for monetary damages under the Government Claims Act, from claims brought under other statutes or for other relief. In the former (waiver) cases, the Guam Supreme Court said the waiver of sovereign immunity is jurisdictional in nature so that if the action is barred, the Court lacks subject matter jurisdiction over plaintiffs claim ( 18; citation omitted, emphasis added.) Barred actions are legal in nature and cannot be revived by equity, including equitable estoppel. In Pacific Rock II, the Guam Supreme Court return[ed] to the policy adopted by the 9th Circuit. (At 36.) It said, breach of contract claims seeking monetary damages for contracts procured under the Procurement Law are distinct from other contract claims that arise under the Procurement Law, in that there is no waiver of sovereign immunity.... ( 39.) Pacific Rock II held, [o]ur opinion is restricted to breach of contract cases for contracts procured under the Procurement Law, which involve money owed to or by the Government of Guam. For other types of contracts procured under the Procurement Law and whose claimants have been afforded a comprehensive remedial scheme both
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(2)
(b)
(c)
administratively and legally under the provisions, we affirm our holding in Pacific Rock I, which states that the Procurement Law controls those types of actions against the Government of Guam as intended in the Procurement Law. (At 53.) (d) In Pacific Rock I, the Supreme Court ruled that because the action was not filed within the required time limit the trial court lacked jurisdiction (at 33). It did not specifically discuss equitable tolling, but implied there would have been no factual basis for doing so in that case because, while the result today brings about an unfortunate consequence to PRC, the company waited an inordinate length of time to bring its action. The laws assist those who are vigilant, not those who sleep over their rights (at 32). This ruling left wide open the door for consideration of equitable tolling issues for those, who while technically late, nevertheless are vigilant. The Pacific Security Alarm Superior Court case, supra, relied upon Pacific Rock I and Pacific Rock II in holding that filing deadlines generally are limitations rules and not jurisdictional, thus subject to equitable tolling. Critically, for limitations periods applicable to administrative proceedings, such as hearings before the OPA, Pacific Rock II based its ruling regarding the jurisdictional aspects of Claims Act actions on the specific waiver of sovereignty from suit, implying it is limited to actions in court, and thus not applicable to executive administrative reviews. (See discussion in 19-20.)
(e)
(f)
(3)
GHURA v. Dongbu Insurance Company, Ltd., 2001 Guam 24 specifically involved an insurance claim, but the Guam Supreme Courts reasoning and language, in specifically adopting equitable tolling in limitations periods under the private law of contract for insurance claims, was broader. See the discussion of equitable tolling in that Decision beginning at 10.
h.
Regulatory limitations periods are not jurisdictional; only statutory limitations periods are subject to jurisdictional bars. What must be remembered in the discussion of equitable tolling above, is that the US Supreme Court case law on the issue concerns only statutory
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time limitations. Time limitations contained in rules and regulations do not carry the same fundamental concern over jurisdiction. (1) In Kontrick v. Ryan, 540 U.S. 443 (2004), the US Supreme Court considered an issue of a time limitation established by the Bankruptcy Rules. In ruling the rules time limitation was not jurisdictional, the Court said, in the words, but not exactly in context, as follows (at pp 452 - 454): (a) Only Congress may determine a lower federal court's subject-matter jurisdiction. Congress authorized bankruptcy courts to adjudicate, inter alia, objections to discharge. Certain statutory provisions governing bankruptcy courts contain built-in time constraints. The time constraints applicable to objections to discharge are contained in Bankruptcy Rules prescribed by this Court. "[I]t is axiomatic" that such rules "do not create or withdraw federal jurisdiction." Owen Equipment & Erection Co. v. Kroger, 437 U. S. 365, 370 (1978). In short, the filing deadlines prescribed in Bankruptcy Rules 4004 and 9006(b)(3) are claim-processing rules that do not delineate what cases bankruptcy courts are competent to adjudicate. Kontrick ... overlooks a critical difference between a rule governing subject-matter jurisdiction and an inflexible claim-processing rule. ... [A] claim-processing rule, ... even if unalterable on a party's application, can nonetheless be forfeited if the party asserting the rule waits too long to raise the point.
(b)
(c)
(d)
(2)
Although the Kontrick case did not deal explicitly with the applicability of equitable estoppel to regulatory timing rules, it did say time limitations in such rules are not jurisdictional; which would at least raise the same rebuttable presumption of the application of equitable tolling as discussed in the Irwin and Holland cases discussed above.
4.
Recall the trap for the unwary presented by the Request for Reconsideration. Hint: If the original protest decision (or even if the answer to a request for reasons) contains a statement informing the protestant of its right to administrative and judicial review (see 5 GCA 5425(c)(2)), the protester must not dilly-dally around with any request for reconsideration, otherwise
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the time for filing any appeal is jeopardized. While the equities and the Model Regulation version (R9-101.08.3 as discussed above in Article XVI.K.2 regarding parties to the protest) more clearly would favor allowing time for the reconsideration process to take its course, the law fairly clearly indicates (but not conclusively) the Appeals process is triggered by the initial decision, and the author is aware of no case on the subject. Takeaway: when in reasonable doubt, file an appeal to preserve your rights. 5. Recall that a rejected bidder can request the Agency to provide reasons for its bid rejection (2 GAR 3115(e). In this case, assuming the bidder had no reason to know it may be aggrieved, the 15 day period to appeal would not begin to run until the reasons were disclosed, assuming the reasons given form the basis of a grievance. The takeaway here is, if you have or suspect you have a grievance but are engaged in discussions with the government about it, file the Appeal anyway within the 15 days to preserve your claim.
6.
E.
Jurisdiction of the Public Auditor 1. The time limit for filing an Appeal is strictly enforced but not jurisdictional and is subject to equitable tolling. (See the discussion of Equitable Tolling in Article XVIII.D.3, and Pacific Security Alarm, Inc. v DPW, supra.) The Public Auditor has the power to review and determine any matter properly submitted (5 GCA 5703), protested in connection with the solicitation or award (5 GCA 5425(a)) or arising from the protest decision (5 GCA 5425(e)). a. See, In the Appeal of [IBSS vs GPSS(1)], OPA-PA-08-003, where the Public Auditor ruled she lacked jurisdiction over an appeal to consider the merits of the protest where there was no agency decision, but nevertheless took jurisdiction over the appeal to compel an agency to render a decision on a protest. Some have argued that the Public Auditors review is constrained to the scope of the issues expressly raised in the protest; that is, if an issue of alleged impropriety is not expressly raised in the protest it cannot be considered on appeal. (1) The author considers that argument to be unduly restrictive and, if taken to its logical conclusion, would require the Public Auditor to ignore improprieties coming to her attention in the course of a procurement protest and appeal and thereby constrain the Public Auditors mandate to utilize her jurisdiction to promote the integrity of the procurement process and the purposes of the Procurement Act (5 GCA
2.
b.
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5703). (a) Consider, for instance, IBSS vs GSA, OPA-PA-08-012, where the Appellant had protested the method of source selection, only to find out from the decision and subsequent response to the appeal that there were other equally significant issues that were unknown at the time of the protest. The Public Auditor did not fail to consider and decide those other issues.
(2)
The author further believes any such constraint would work to delay and confound expeditious hearing and resolution of protests, since, if taken to its logical conclusion, once any new issue emerges it would require the appellant to start a new protest, precipitating another appeal, thus continuously staying the procurement and dragging out resolution of the controversies. Note that 5 GCA 5701 requires the Public Auditor to adopt rules of procedure, which, to the fullest extent possible, will provide for the expeditious resolution of controversies.... These rules shall be construed and applied to provide for the expeditious resolution of controversies.... (2 GAR 12101.)
c.
Note, though, that an appeal of a contract dispute does not implicate the integrity of the procurement process, being limited to contract law matters. Thus, in contract disputes, the authors arguments above do not apply. Indeed, in In the Appeal of Guam Pacific Enterprises, Inc., (OPA-PA-09-003), a contract dispute appeal discussed infra, the Public Auditors Decision held she lacks jurisdiction to review contract controversies which have not been previously brought to the attention of the appellee agency.
3.
Scope of OPA jurisdiction: The Public Auditors jurisdiction shall be utilized to promote the integrity of the procurement process and the purposes of [the Guam Procurement Act]. (Id.) a. The Public Auditor has used this jurisdiction frequently to achieve results where specific authority has not been specifically provided in the law or regulations. See, e.g., In the Appeal of O&M Energy, S.A., OPA-PA-08-004 (where she carefully scrutinized an agency determination of materiality when there were extravagant differences between the price of the bids). (1) It is interesting to observe that the O&M Appeal was one of the few instances where the Public Auditors Decision went beyond (if only slightly) the Findings of the Hearing Officer,
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indicating her experience as auditor can add a very helpful insight to the strictly legal approach of lawyers and courts. The author believes giving the Public Auditor review authority over bid protests was a stroke of legislative genius that has brought about a significant improvement in forging a workable and effective GovGuam procurement process. b. It should be carefully noted that the jurisdiction to promote the purposes of the Procurement Act gives weight and substance to the policies and purposes expressed in the Procurement Act (see, Article II.A).
4.
OPAs Standard of Review is broader than Court review: The Public Auditors power to review agency protest action is de novo (5 GCA 5703). From a practitioners or vendors viewpoint, this is de-lovely and delicious because it provides a complete contrast to how Courts review such actions. a. De novo review is contrasted with deferential review. Under a de novo review, the reviewer steps into the shoes of the original decision maker and comes to her own original decision. Under a deferential review standard, the original decision must be accepted unless it is clearly illegal, erroneous, capricious or arbitrary. (See, L.P. Ganancias, CV 1787-00, supra, at page 11 et seq.) Therefore, do not confuse the deferential standards of review in a Court with the de novo standard of review before the Public Auditor. (1) An excellent and hard to locate, but now becoming dated and unofficial, outline of the significance and incidences of standards of review in the Ninth Circuit Court of Appeals gives the following definitions of de novo review: The appellate court must consider the matter anew, as if no decision previously had been rendered. ... No deference is given.... Thus, the standard of de novo review is exactly the opposite of the deferential standard.
b.
When Courts review an agency determination, they use the deferential standard of review. An excellent summation of this standard of review is found in GMHAs Supplemental Response to Appellants Comments to Agency Report in the Appeal of J&G Construction, OPA-PA-07-005 ; see http://www.guamopa.org/docs/procurement_appeals/GMHAs_Suppl emental_Response_to_Appellants_Comments_to_Agency_Report_07 _005.pdf . (The Public Auditors Decision in that Appeal ignored, and did not even undertake to discuss, the argument that it should abide by the deferential standard.)
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(1)
It has been said that a reviewing court will not substitute its decision for an agency decision even if, in the courts view, the agency decision is wrong or even dead wrong, so long as it is not illegal.
c.
It is important to distinguish, when discussing these varying standards of review between the OPA and the courts, that the standards being discussed here are standards of review applicable to a review of findings and determinations of facts. OPAs de novo review applies to both facts and law. Even before a court, questions of law usually are examined under the independent de novo standard of review. (See, e.g., Sule v. Guam Board of Dental Examiners, supra, 13.) On the other hand, the deferential standard of review applied by courts is almost always in relation to a review of findings and determinations of fact. (1) Under a substantial evidence standard of review, ... [An] appellate court must not do its own weighing of the evidence or substitute its factual determinations for that of the lower court. (Sule, supra, 26.)
d.
In both the GCIF Appeal, OPA-PA-09-005 and the GEFF Appeal, OPA-PA-09-007, supra, the Public Auditor specifically discussed and held her standard of review is, in contrast to a courts deferential standard of review, de novo. The Public Auditors de novo review has even greater significance when there is an appeal to a Court from the final Decision of the Public Auditor, because, in that case, it is the Public Auditors decision and findings of fact that must be accorded deferential treatment by the Court, not the agencys: (1) Any determination of an issue or a finding of fact by the Public Auditor shall be final and conclusive unless found by a court to be arbitrary, capricious, fraudulent, clearly erroneous, or contrary to law. Any decision of the Public Auditor, including any determination regarding the application or interpretation of the procurement law or regulations, shall be entitled to great weight and the benefit of reasonable doubt, although it shall not be conclusive .... (5 GCA 5704.)
e.
f.
The author takes the view that the Public Auditor must be considered to be a functional part of the Executive Branch of government and not subject to the same constraints as the separate but co-equal judicial branch. Although not subject to the control of the Governor, the OPA is an executive instrumentality in the same
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way that the Attorney General is a functional part of the Executive Branch, and notwithstanding legislative language at face value setting OPA apart as an equal and independent branch of government: There is an instrumentality of the government of Guam, independent of the executive, legislative and judicial branches, known as the Office of the Public Auditor. (1 GCA 1900.) (1) The Organic Act only recognizes three branches of government: The government of Guam shall consist of three branches, executive, legislative and judicial.... (Organic Act of Guam, 48 USC 1421a.) Any legislation purporting to create a fourth or fifth branch would be inOrganic. Judges are not experts in the field, and are not part of either political branch of the Government. (Chevron USA, Inc v Natural Res Def Council, Inc, 467 US 837 at 865 (1984).)
(2)
g.
Thus, the duty of the Public Auditor to use her jurisdiction to promote the integrity of the procurement process and the purposes of [the Guam Procurement Act] represents the last line of Executive Will to get its procurement right. (1) That is why the author believes, in contrast to the courts which are hesitant to interfere with executive discretion (see, J&B Modern Tech, supra, p 4), the Public Auditor is allowed, indeed directed, to take a more assertive role in inserting her oversight of executive procurement matters. Generally, the doctrine of separation of powers restricts judicial review of decisions by the executive branch of government. ( Medical Arts Clinic v. Franciscan Initiatives, 531 N.W.2d 289 at 300 (N.D. 1995).)
(2)
5.
OPA jurisdiction extends to hearing appeals from decisions to suspend or debar a contractor. (5 GCA 5426(e), 5705 [note the reference error in 5426(e), which mistakenly points to 5706].) OPA does not have jurisdiction of matters merely incidental to procurement: All contractors are subject to a wide array of laws, some of which specifically apply merely by virtue of their contracting with the government. It is not the role or duty of the procurement staff to enforce most of such laws, even if they have an obligation to make sure compliance is part of the contract requirements. For instance, most contracts, and therefore bid or proposal solicitations, require compliance with Equal Opportunity laws, but it is not the role of the procurement system to enforce such compliance.
6.
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a.
Jurisdiction does not extend to disputes having to do with money owed to or by the government of Guam. Those must be brought under the Guam Claims Act. A full review of the Government Claims Act is beyond the scope of this paper. See generally, 5 GCA 6101, et seq. OPA jurisdiction does NOT include direct review of Ethical violations (see Ethical Standards in Article II.I.5, above). (1) Complaints of ethics violations by Government employees are handled by the Civil Service Commission. (5 GCA 5675, 5676.) Complaints of ethics violations by non-Government persons are intended to be handled by the Policy Office (5 GCA 5675), which isnt empaneled, and governed by its regulations (5 GCA 5676(a)), which seem not to exist in substance (see, 2 GAR 11112, 11114.) Thus, nonGovernment persons are effectively free of any administrative discipline if they violate the Ethical Standards. This would seem to be a deficiency to be rectified. The Public Auditor cannot adjudicate ethical violations and will only consider complaints of ethical violations (by government and, perhaps, non-government parties) when raised in connection with an appeal from a protest of a particular solicitation or award. (In the Appeal of Latte Treatment Centers, OPA-PA-08-008.) Not seeing any such connection to the appealed solicitation in that case, and while noting that payment of a government employees accommodation in a matter unconnected to the particular solicitation on appeal was not proper and has created the appearance of impropriety, the Public Auditor found there was no breach of ethical standards in that case. Presumably, the jurisdictional basis for even considering and making any finding of such ethical violations arises under the Public Auditors duty to promote the overall integrity of the procurement process.
b.
(2)
(3)
c.
Wage Determination issues: (1) There is, within the codification of the Procurement Act, an obligation for every contractor for the provision of a service to the government of Guam to pay its employees whose purpose, in whole or in part, is the direct delivery of service contracted wages and benefits in accord with the
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Wage Determination rates issued by US DOL. (5 GCA 5801, 5802.) (a) It would appear, from this, that the wage compliance obligation does not apply to a bidder or vendor under an IFB for supplies or construction items. Recall that service is particularly defined and does not refer to incidental services provided in a supply contract. Services means the furnishing of labor, time or effort by a contractor, no involving the delivery of a specific end product other than reports, which are merely incidental to the required performance. (5 GCA 5030(s).)
(b)
(2)
5 GCA 5805 obliges the CPO to require bidders to submit declarations ... to demonstrate their compliance.... 5 GCA 5211(b) requires that IFBs contain a recitation of the Wage Determination and the demonstration required above. These are not enforcement obligations; they are disclosure obligations. 5 GCA 5211(g) only allows an award to the lowest responsible bidder ... whose bid amount is sufficient to comply with Article 13 of this Chapter, if applicable. Article 13 is the Wage Determination law. (a) It may be possible to contest an award (but arguably not a bid) made to a service provider under an IFB (Invitation for Bids) if the bid amount is insufficient to comply with the wage compliance obligation. There is, however, ambiguity in trying to determine what whose bid amount is sufficient to comply means, because it is often the case that bids do not contain the identity of particular amounts bid for particular services. Conceivably, that could be required in the bid conditions. However, if the bid amount means the total bid amount, it may be impossible to do the forensic accounting necessary to dis-aggregate the pricing for the Wage Determination analysis. It should be noted that bidders costs are generally not reviewable (an offerors pricing and costs may be considered in the context of an RFP see Article VIII.D.10 but 5211(g) is not applicable to RFPs);
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(3)
(b)
(c)
only contractors costs are reviewable, and even then only in the limited circumstances described in 2 GAR 7101, such as i) To determine the allowability of incurred costs for the purpose of reimbursing costs under contract provisions which provide for the reimbursement of costs. the establishment of price adjustments for contract changes. the pricing of termination for convenience settlements. These cost principles regulations are not applicable to: a) (a) the establishment of prices under contracts awarded on the basis of competitive sealed bidding or otherwise based on adequate price competition rather than the analysis of individual, specific cost elements, except that this Chapter does apply to the establishment of adjustments of price for changes made to such contracts; (b) prices which are fixed by law or regulation; and (c) prices which are based on established catalogue prices.
ii)
iii)
iv)
b)
c)
(4)
5 GCA 5803 requires the Guam Department of Labor to monitor compliance with the provisions of this Article. This makes it clear that this is not a procurement matter. (a) In a post-award protest alleging the contractor did not pay the minimum wage, the Public Auditor has ruled that she did not have jurisdiction to consider the matter because the enforcement of the labor laws is not through the procurement protest and appeals process but is an entirely separate administrative adjudicatory process. (In the Appeal of JRN Air Conditioning & Refrigeration, Inc., OPA-PA-10-008,
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at p. 9.) (5) For a discussion of the application of Wage Determination law to procurement, see the discussion of In the Appeal of Advance Management, Inc., in Article XXIV.A.7.a of the review section at the end of this outline.
d.
Certification of Funding: Questions have arisen whether a solicitation or procured contract are valid if there is no specific certification made prior to the event certifying that sufficient funds are available to cover the obligation of the solicitation or contract. The author is of the view that these are internal financial control matters and not issues that determine the validity of the solicitation or contract. (1) At the end of the year 2010, Senator Benjamin J.F. (BJ) Cruz asked the Guam Attorney General for an opinion whether a contract, entered into by the Government to supply medical insurance for government employees by Calvos SelectCare, was valid, if given that there was no certification of available funding and existing appropriations for the fiscal year would not be sufficient to pay the full costs of the contract. (a) The AGs Office responded to the query by letter dated December 29, 2010. As to the certification issue, it said (at p. 4), we have found no legal or statutory requirement that a certifying officer must certify to the availability of funds on the face of a contract. i) Since execution a contract follows a solicitation, if certification is not required for the contract, it would not be required for the solicitation.
(b)
(c)
As to contract validity, the AG response cited to 5 GCA 22401(a), which requires that no officer or employee of the government shall make or authorize any expenditure of funds in excess of the amount available. The amount available is defined in respect of the appropriations made and actual payments made from the appropriations. i) The AG response did not make a general response to this question, restricting it to the
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fact that, in the particular case at hand, it involved an indefinite delivery contract whose total obligation was unforeseeable. In that case, the AG concluded, so long as the government has sufficient funding to pay for each periodic installment of premiums due as they become due, then there is no violation of 22401(a), assuming 22401(a) is applicable. (At p 7; bold and italics added.) ii) The author believes the cited provision is not applicable in the first place, as also implied by the conditional assumption emphasized above. That provision does not declare the contract to be invalid; it merely places a personal, directive obligation on employees not to spend the funds. The response notes (see discussion at pp 2-4) the personal obligations of certifying officers is detailed in 14 GCA 14104(a)(1) and 14106(a), and, as noted above, found no obligation to certify funds to validate a contract. Further, [a]n examination of 5 GCA 22401(a) also does not reveal any requirement that a certifying officer must certify funds on the face of a contract.
iii)
(2)
In a pending OPA Appeal, In the Appeal of Town House Dept. Stores, Inc., dba Island Business Systems and Supplies [IBSS vs DOE], OPA-PA-10-010, DOE had denied a protest to award a contract based, in largest part, on the fact that funds had not been certified. (a) The Appellant based its argument that funding was not a procurement issue (i.e., did not affect the validity of the solicitation), based on an analysis of regulations conditioning the governments right to cancel a solicitation (pre bid opening) or reject all bids (after bid opening). Appellant noted that fund certification was an internal financial control obligation, but not a matter that affected the validity of the procurement process. i) 2 GAR 3115(d)(2)(B)(ii) allows, but does not mandate, the government to cancel all bids if the territory no longer can reasonably expect
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to fund it. This does not require the fact or preciseness of certification, and is based solely on good faith expectation that things have changed since the solicitation was issued such that the government can no longer expect to fund. It implies that the government has, as a condition of issuing the solicitation, anticipated having funding and obligated itself to fund the solicitation, but found itself in changed circumstances. a) This implication is buttressed by the policy enunciated in 2 GAR 3115(b), which states, [s]olicitations should only be issued when there is a valid procurement need.... Validity of the solicitation, therefore, is presumed on issuance. If bidders could not rely on the validity of the solicitation, the governments procurement needs and desires would be frustrated.
ii)
2 GAR 3115(d)(2)(A)(iv) allows, but does not mandate, the government to reject all bids if prices exceed available funds and it would not be appropriate to adjust quantities to come within available funds. At this point in the procurement process funding availability is not longer a procurement issue; the focus has changed to prices. a) The government should not open bids if funding can no longer be reasonably expected; it should cancel them as indicated above. Once opened, as is the nature of auction contracts, there is compelling legal principle to find a completed contract based on the reasonable expectations of the solicitation, which is that prices would not exceed the reasonably expected funding. The government is not obligated to accept any bid or proposal whose price is unreasonable. See, e.g., 2
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b)
GAR 3102(c)(1), 3112(c), 3114(l)(1), 3115((d)(2)(A)(v), etc. (3) Note, also, that even the validity of discretionary purchases under a Blanket Purchase Order issued under the Small Purchase method of source selection is not based on any certification of funding. Rather, the burden is specifically placed on the agency ... for keeping obligations and expenditures within available funds. (2 GAR 3122.11(c).) Certification of funding is not a procurement obligation (one affecting the validity of the relationship between the government and actual or prospective contractors) but a house-keeping, internal operations obligation of the servants of the government.
F.
OUTLINE OF AN APPEAL: 1. Island Formal: Appeals to the OPA are intended to be more user friendly, casual and informal than, for instance, court cases, but at the same time they are structured to find and extricate fact from perception, reality from paranoia, law from lore. They are formal, but not too formal; legalistic, but in a small claims court sort of a way. That said, OPA staff do have higher expectations from lawyers than lay persons, so do not be overwhelmed by the legalese in the form or format you find from information or actions by lawyers. The OPA will not protect you from your own folly, but they will help cushion you from the folly of any lawyers you may bump up against. a. The OPA staff is very helpful in guiding novices through the process (as opposed to the substance or merits) of your claim, within the bounds of their obligation to remain neutral and bureaucratic. (1) No person directly or indirectly involved in an Appeal shall communicate with the Hearing Officer or the Office of Public Auditor staff regarding any evidence, explanation, analysis, or advice, whether written or oral, regarding any matter at issue in an Appeal except (2 GAR 12107): (a) (b) At a hearing; or With the consent or in the presence of all other parties (or counsel); or By means of papers allowed to be presented in the case.
(c)
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(d)
OPA staff may entertain questions or complaints that are not related to the substance of pending appeals. OPA staff shall report communications regarding pending appeals to all parties.
(e)
b.
The Public Auditor makes it a practice to attend and participate in hearings of appeals, and, one would hope, formation of the Decision, but doesnt apparently take much of an operational hand in managing the appeals process (supervising, yes; managing, no). The administration is left to OPA staff and the conduct of the process is left to a Hearing Officer. CAVEAT: This outline is bare bones, and not even typical. It doesnt canvass every required event or step along the way, just the main points, in the authors view and judgment. Every case has its own procedural needs and differences, as you can observe by looking through the OPA Procurement Appeals files. The regulations governing Procurement Appeals are mainly found in Title 2, Division 4, Chapter 12 of the Guam Administrative Rules and Regulations, 2 GAR 12101 et seq.
c.
2.
First step, filing the Notice of Appeal. a. The Public Auditors website (http://www.guamopa.org/) contains links to all the minimally required Rules of Procedure and required forms to get you started, including the contents of the Notice of Appeal. You can also look at other Appeals cases to get an idea of the framework and form. Although the Appeal was dismissed because the Appellant failed to first protest to the agency, there is an excellent example of a do-ityourself appeal filed, using OPA forms, in In the Appeal of Mega Limited Corporation (the inherent contradiction of which amuses the author), OPA-PA-09-001, http://www.guamopa.org/docs/procurement_appeals/ Notice_of_Appeal_09_001.PDF . The minimal requirements for filing a NOTICE OF APPEAL, which is the document the protestant/appellant files, in triplicate, to start the appeal, are (2 GAR 12104(b)): (1) (2) Name, mailing and business address of the Appellant. The bid number or other identification of a solicitation or contract appealed.
b.
c.
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(3)
A concise, logically arranged, and direct statement of the grounds for Appeal. This is where the Appellant gets to explain how the agency got everything so horribly wrong; but keep it brief. It seems those taught to write a brief do the worse job with brevity, the author being particularly wordy. A statement of what ruling you want from the Public Auditor (the relief requested). Verification of the facts stated. Signed by the Appellant (including representatives). Including all documents and documentary evidence. Including copies of all final official documents from the protest or contract dispute. Plus a statement that there is no pending court action in the matter (the OPA has a form for this). Plus you are expected to file with the Appeal, or soon thereafter (by the time required for filing Comments on the Agency Report, which is about 20 days), an election whether you want your case decided by a hearing (and theres a form for this, too). If you do not timely file this election, you waive your right to a hearing. Generally, the more your case turns on disputes of facts rather than disputes of law, the more helpful it is for you to have a hearing. Anything else you consider particularly necessary to help the Public Auditor understand your case.
(4)
(5) (6) (7) (8)
(9)
(10)
(11)
d.
Once filed, the OPA must notify the affected GovGuam agency within 24 hours and deliver to it a copy of the Notice of Appeal. It is the duty of the agency to notify any counsel, including the Attorney General, to notify other interested parties.
3.
Second Step, the Procurement Record a. Within five (5) days from filing the Notice of Appeal, (excludes weekends, holidays), the agency must file (and deliver copy to Appellant) the Procurement Record. (2 GAR 12104(c)(3).) It should be in chronological order, numbered sequentially, tabbed, and indexed. The main GovGuam agencies do a fairly decent job of putting together the information, to the extent they have actually
b.
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made and kept a Procurement Record. See In the Appeal of Latte Treatment Center, discussed below, which cancelled an RFP principally for the reason of a deficient record. (1) 5 GCA 5249. Record Of Procurement Actions. Each procurement officer shall maintain a complete record of each procurement. The record shall include the following: (a) the date, time, subject matter and names of participants at any meeting including government employees that is in any way related to a particular procurement; a log of all communications between government employees and any member of the public, potential bidder, vendor or manufacturer which is in any way related to the procurement; sound recordings of all pre-bid conferences; negotiations arising from a request for proposals and discussions with vendors concerning small purchase procurement; brochures and submittals of potential vendors, manufacturers or contractors, and all drafts, signed and dated by the draftsman, and other papers or materials used in the development of specifications; and the requesting agencys determination of need.
(b)
(c)
(d)
(e) (2)
5 GCA 5250. Certification of Record. [Cf, 2 GAR 3130] No procurement award shall be made unless the responsible procurement officer certifies in writing under penalty of perjury that he has maintained the record required by 5249 of this Chapter and that it is complete and available for public inspection. The certificate is itself apart of the record. Note that this list is not exhaustive; it is only minimal. There are many other requirements throughout the law and regulations for determinations, certifications and reports and other detail that must be made in connection with solicitations, and these should also be included as part of the record. (See, e.g., 2 GAR 12501(c): the agency shall file with the Office of the Public Auditor a copy of all determinations made ..., together with any information used or considered by the agency in making that determination.) Feel free to request any such information if not produced.
(3)
4.
Objections to OPA jurisdiction (2 GAR 12104(c)(9)).
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a.
Any objection or motion addressed to the jurisdiction of the Public Auditor shall be promptly filed. The Public Auditor shall have the right at any time to raise (or consider) the issue of her jurisdiction. Jurisdiction is always a deal breaker. Jurisdiction is what provides authority, so without any jurisdiction, whenever that is discovered, there is no authority to hear or decide. Disqualification is not the same thing as jurisdiction, strictly speaking, but flows from the due process requirement of a fair and impartial hearing. Even at the US Supreme Court level, the Justices each make their own independent judgment as to whether they should recuse themselves. Jurisdiction more clearly is a legal question than disqualification, except in extremity. (1) Any objection or motion addressed to the jurisdiction of the Public Auditor shall be promptly filed. (a) Under the original regulations, a request to disqualify the Public Auditor from hearing the Appeal (e.g., conflict of interest or other recusal type objection) was to be filed within seven (7) days after the notice of Appeal is filed. According to the OPAs 2009 Annual Report (p. 20), an appropriate amendment has been made to remove the 7 day deadline. Under 2 GAR 12601 a disqualification issue is to be raised prior to the hearing.
b.
c.
(2)
Dismissals of Appeals due to the recusal (disqualification) of the Public Auditor have not been infrequent and have likely upset a few disappointed bidders because there is no alternative to an administrative review of a bid protest (other than court action, which offers a very deferential hearing of procurement appeals) if the Public Auditor is recused. (a) In In the Appeal of Teleguam Holdings, LLC dba GTA Telecom, OPA-PA-10-002, the appellee government agency moved to recuse the Public Auditor, which was granted. The Public Auditors recusal Decision and Order notified the parties that the Decision was Final and that the appeal must be taken to the Superior Court. The Appellant then commenced an appeal in the Guam Superior Court (Teleguam Holdings, LLC v. GSA, SP 0050-10) but the government agency argued
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(b)
the recusal Decision was not final because the Administrative Adjudication Act provided for alternate procedures to allow the administrative review to be held by someone other than the Public Auditor; therefore, the appeal to the Superior Court should be dismissed. (c) In her Decision and Order dated April 29, 2010, Judge Elizabeth Barrett Anderson held that the Public Auditor is mandated to render the decision and there was no statutory authority to appoint anyone else in the Public Auditors place. 2 GAR 12601 provides, [i]n the event of disqualification or recusal of the Public Auditor, a procurement Appeal must be taken to the Superior Court of Guam in accordance with 5 GCA 5480. In her OPA 2009 Annual Report (p. 20), the Public Auditor noted that there has been an amendment (in 2 GAR 12602, which does not seem to be recorded anywhere) allowing other OPA officers to hear an appeal if the Public Auditor is recused, but that it cannot be effective without a legislative change to 5 GCA 5702, which says, [t]he Public Auditor shall issue a decision....
(d)
(e)
(3)
Such dismissals have been for such tenuous reasons as the Public Auditors husband had been under the care of a doctor who was a principal in the business of an Appellant (In the Appeal of Teal Pacific, OPA-PA-08-010; and see a similar result in In the Appeal of Teal Pacific, OPA-PA-09002), or her husbands legal firm represented one of the parties (In the Appeal of Far East Equipment, OPA-PA-08001). Recognizing the inconvenience and injustice of this lack of alternative, the Public Auditor as asked for legislative change to provide an alternate designee in the event of the Public Auditors disqualification (see, her Inaugural Remarks, January 9, 2009, http://www.guamopa.org/docs/2009_Inaugural_Remarks.pdf ). In In the Appeal of Teleguam Holdings, LLC dba GTA Telecom, OPA-PA-10-002, the Public Auditor first announced the appropriate standard for determination of her recusal.
(4)
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(a)
In her Decision on the appellees motion for her recusal, the Public Auditor said the appearance of impropriety standard does not apply to adjudicators of administrative hearings such as the Public Auditor. Relying on the decision of the Guam Supreme Court in Sule v. Guam Board of Dental Examiners, 2008 Guam 20, for this standard, she concluded the recusal standard applicable to the Public Auditor is the higher standard of actual bias. The Public Auditor decided she did not have any actual bias in the matter notwithstanding her step-son is a lawyer who represents the Appellant in some matters, but not in this one. i) It might be noted that the Court, in the Sule decision ( 20), quoted with apparent approval a California decision that adjudicators are presumed to be free from bias and, to defeat the presumption, any allegation must be supported by facts and proof that the outcome flowed from [the alleged bias].
(b)
(5)
The Public Auditor, in the GTA Telecom appeal, however, went on to conclude that she had another independent requirement to disqualify herself (because she could not recuse herself since there was no actual bias proven). She held she was required by ethical considerations, which created a conflict of interest, not to participate in the appeal. (a) The Public Auditor ruled that it is a breach of ethical standards (quoting specifically 5 GCA 5628(a)(1)) for any government employee to participate directly or indirectly in a procurement when the government employee knows that she or any member of her immediate family has a financial interest pertaining to the procurement. This matter is more fully discussed in the review of this appeal in Article XXIV. In disqualifying herself, the Public Auditor (unfortunately) said she was recusing herself, notwithstanding her clear finding she did not meet the recusal standard. More appropriately, in the
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(b)
authors view, she disqualified herself rather than recused herself. Recusal would be one reason for disqualification, and a conflict of interest another. Normally this might be considered semantic pedantry, but in the context of this case, where the particular standards and reasons are carefully explained and differentiated, it is best not to muddy the distinctions. 5. Third Step, the Agency Report: a. The guts of the Agency Report is the agencys answer to the merits of the complaints raised in the Appeal, including law and fact. This is where the agency gets to tell how the Appellant got everything so horribly wrong. The Agency Report is meant to be filed ten (10) days after receiving the Notice of Appeal, except in cases of an appeal of a Contract Dispute, when there is a twenty (20) day response time. Much of what is required in the Agency Report has already been filed in connection with the Notice of Appeal or Procurement Record, such as a copy of the protest and bid, agency decision on the bid protest, etc. The Agency Report must include a statement answering the allegation of the Appeal and setting forth findings, actions, and recommendations in the matter together with any additional evidence or information deemed necessary in determining the validity of the Appeal. The statement shall be fully responsive to the allegations of the Appeal. (2 Gar 12105(g).)
b.
c.
d.
6.
Fourth Step, the Appellants Comments on Agency Report and Request for Hearing (2 GAR 12104(c)(4), and 12108(a)): a. b. This is were the Appellant gets to tell the agency, Did not. Any interested party may also comment on the Agency Report. (1) Interested Party means an actual or prospective bidder, offeror, or contractor who appears to have a substantial and reasonable prospect of receiving an award if the Appeal is denied. (2 GAR 12102(b).) This definition is broader than the definition discussed above in relation to bid protests, and the author suspects the meaning to probably be even a bit broader than that; the word means probably means includes, because the prospect of receiving an award
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arguably only refers to a pre-award situation, and appeals can be based on actual awards. More importantly, it would not include, e.g., a government agency, who is obviously interested but elsewhere defined, perhaps, as an affected or using agency (see, 2 GAR 12102(e)). c. Comments on the Agency Report must be filed within ten (10) days of the filing of the Agency Report. Written request for a hearing must also be made at least 10 days after OPAs receipt of the Agency Report. Hearing is waived if not timely requested absent unusual circumstances. (2 GAR 12108(a).)
d.
7.
Fifth Step, the agencys Rebuttal to Appellants Comments on Agency Report. a. b. This is where the agency gets to tell the Appellant, Did too. Rebuttals are meant to be filed within five (5) days of filing the Comments to which the rebuttal is addressed.
8.
Disregard of Comments (or Rebuttal?) if not timely filed. a. The failure of an Appellant or any Interested Party to comply with the time limits stated in this section may result in resolution of the Appeal without consideration of the comments untimely filed. (2 GAR 12104(c)(5).) Note definitional issues above. Is it really intended that this sanction does not apply to rebuttal or other comments affected or using agencies?
9.
Discovery a. In court litigation, rules of discovery (where parties can seek information from the other side before the trial) are technical, often traps, often encouraging gamesmanship. Not so in procurement appeals. Although there are no particular discovery rules provided in the regulations, it would appear to be within the power of the Hearing Officer to determine the nature, scope and other matters concerning discovery. All you have to do is file a Request for information with the Hearing Officer (and answer to the Hearing Officer any questions or concerns) and the Hearing Officer can direct a response. (1) In order to expedite consideration of the Appeal, any additional information requested by the Hearing Officer shall be submitted within five (5) working days of receipt of such
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request. (2 GAR 12104(c)(7).) (2) The Hearing Officer has the power to require parties to produce for examination those relevant witnesses and documents under their control and fix time limits for submission of documents, as well as compel attendance and testimony and sanction for nonperformances. (2 GAR 12109.)
10.
Role of the Hearing Officer a. The Hearing Officer should be an attorney, and must be a Guamlicensed attorney if contracted (as compared to employed) for the purpose. The Hearing Officer, among other roles, powers and duties (see generally, 2 GAR 12108, 12109): (1) may hold informal conferences to settle, simplify, or fix the issues in a proceeding, or to consider other matters that may aid in the expeditious disposition of the proceeding, by consent or on motion. (a) It is the authors experience and observation that Guam OPA has not led the way in any informal settlement by alternate dispute resolution. Rather, the Hearing Officers usually simply cut to the chase in a more formal manner, even when parties appear in pro se, immediately scheduling motions and hearing, requiring stipulations, witness lists and the like, and at best simply guiding the parties to meet outside the presence of the Hearing Officer to attempt their own settlement. See, for instance, Notice of Pre-Hearing Conference, In the Appeal of Guam Pacific Enterprises, Inc., OPA-PA-09-003, and listen to the audio of the short hearing, http://www.guamopa.org/docs/procurement_appeals/ Audio_Record_PreHearing_Conference_09_003.wav
(2)
may require parties to state their positions with respect to the various issues. may rule on motions and other procedural items. may fix time limits for submission of documents. shall receive written, oral, or otherwise presented testimony, evaluate such testimony and make recommendations to the Public Auditor.
(3) (4) (5)
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(6)
may consider testimony and evidence submitted by any competing bidder or contractor. may regulate the course of the hearing and the conduct of the participants. may require evidence in addition to that offered by the parties. may receive, rule on, exclude, or limit evidence, and limit lines of questioning or testimony which are irrelevant, immaterial, or unduly repetitious. may impose appropriate sanctions against any party or person failing to obey an order, including (a) refusing to allow the disobedient party to advance a claim or defense. excluding testimony. expelling a party or person.
(7)
(8)
(9)
(10)
(b) (c) (11)
Note that a party may issue a subpoena requiring any person to appear at a hearing to give testimony or produce documentary evidence. Failure of such person to do so should, in the authors opinion, enable the Hearing Officer to issue an order to comply. Although the Hearing Officer might be constrained, without further order of a Court, to compel action consistent with the subpoena, this would seem to give the Hearing Officer authority to grant sanctions for such refusal. Note also that the Public Auditor has express power to compel attendance and testimony of, and production of documents by any employee of the government of Guam, including any employee of any autonomous agency or public corporation. (5 GCA 5703.) Presumably this power can be exercised without aid of a Court. shall prepare a written determination of findings after the hearing, and recommend to the Public Auditor a course of action.
(12)
11.
The Hearing a. Hearings shall be as informal as may be reasonable and appropriate under the circumstances and shall not be bound by statutory rules of
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evidence or technical or formal rules of procedure.... The weight to be attached to evidence presented in any particular form will be within the discretion of the hearing Officer. (2 GAR 12108(d).) b. As a general rule, the Administrative Adjudication Act does not apply to the procurement or appeal process, but is intended to fill in the blanks in the context of the Hearing. Where not otherwise provided for by these rules and regulations or statute, and where not inconsistent herewith, hearings shall be conducted in accordance with the Administrative Adjudication Law in Chapter 9 of Title 5, Guam Code Annotated, including those provisions on subpoenas and contempt. (2 GAR 12108(d).) Ordinarily, only one hearing will be held, but there could be numerous pre-hearing conferences and motions hearings. Lawyers are not turned away, indeed may attend without the principals, but, especially when there are factual disputes or issues of evidence, the real parties are encouraged to attend and participate, subject to rulings about what a witness or potential witness can hear in any particular instance. Except for witnesses as noted, hearings are open to the public. Testimony is normally given under oath or affirmation. Hearings are normally recorded, and the recording eventually made available on the OPA website. Typical hearing process: (1) Each party is allowed to make a short opening statement, broadly describing their case and generally outlining their claims (identifying the issues as they see them), beginning with the Appellant, then the agency, then any interested party. Each party is then allowed to make their opening arguments, specifying the legal points they need to make to raise their claim and generally discuss the facts that will support their case. Rebuttals of the legal issues by opposing parties are then allowed. Each party is then allowed to present their witnesses and other evidence (direct evidence), in the same order as the opening statement. The purpose is to establish the facts they say back their case. You cant just say something is a fact without proving it; well, you can, but it wont carry much
c.
d.
e. f.
g.
(2)
(3)
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weight. (a) Opposing parties get a chance to question the testimony, witnesses and other evidence after it is presented (cross examination). The presenting parties then get a chance to clarify any answers or evidence that came up in the prior cross examination step, but generally not introduce any new evidence that was not introduced in the first direct evidence step.
(b)
(4)
There is usually a wrap-up, where each side gets to give a summation of their case as revealed in the evidence presented by both sides, or other such closing argument or statement. At any point in the proceedings, the Hearing Officer or Public Auditor can interject questions of parties, witnesses and counsel. The order and process of a hearing can be much more flexible, and tends to be when parties are not represented by lawyers. Still, the Hearing Officer will try to control the process so that events will unfold in such a manner as to bring out the material, relevant facts, such as they may be available on the day. So, COME PREPARED.
(5)
(6)
h.
Since procurement hearings are open to the public, if you are contemplating being involved in one, the author recommends you attend a hearing and observe before you have to attend as participant. The hearing dates are posted under Detailed Status for each case, on the Procurement Appeals page of the OPA website.
12.
The Decision a. This is where the Public Auditor gets to tell both the Appellant and the agency where they each got things so horribly wrong. The Decision of the Public Auditor is meant to be rendered within thirty (30) days of the hearing, but under-staffing in the OPA, compared to the overwhelming auditing tasks they are obligated to perform with pay-grade professionals in addition to hearing procurement appeals, has resulted in some Decisions being delayed longer than that. As indicated above, most Decisions of the Public Auditor repeat
b.
c.
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almost verbatim the Findings of the Hearing Officer. The Public Auditor, in her 2009 Inaugural Remarks, characterized the Findings and Decision as redundant, and recommended that the necessity (2 GAR 12110(a)) of having both papers be eliminated. Subsequently, as reported in OPAs 2009 Annual Report (page 20), the regulation was changed to allow only the one Decision by the Public Auditor. d. 13. Each Decision is posted to the OPA website.
Finality of OPA decisions a. A decision of the Public Auditor is final unless a person adversely affected by the decision commences an action in the Superior Court .... (5 GCA 5425(f).) This provision would apply to a decision on the merits of an appeal. Occasionally a party may appeal an interim motion ruling, or a procedural ruling in a final decision, or perhaps remove to the Superior Court for guidance before returning the matter to the OPA for decision on the merits. These are not final decisions as contemplated by 5425(f), supra. (1) 2 GAR 12103(b) requires, [i]f an action concerning the procurement under Appeal has commenced in court, the Public Auditor shall not act on the Appeal except to notify the parties and decline the matter due to Judicial involvement.... (Bold emphasis added.) In Harbor Centre Guam, Ltd v. Doris Flores Brooks, Superior Court of Guam, SP0226-10, (Decision and Order April 20, 2011) OPA dismissed a pending appeal with prejudice after the Appellant commenced an action in the Superior Court (see, Decision and Order, November 22, 2010) to contest a ruling by the Public Auditor to recuse herself from hearing the administrative matter. Dismissal with prejudice means the Appellant could never obtain a judgment on the merits. A case dismissed with prejudice cannot be re-filed or resuscitated. The Court ruled it was error to dismiss the Appeal with prejudice. (a) Based in part on the extreme ramifications of such an order, and in part upon the fact of the act which must be taken in the issuance of the order itself, a dismissal with prejudice is not the equivalent of a refusal to act. The Court finds that the plain interpretation of the rule, and the obvious intent of
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b.
(2)
the plain language used in its terms, is to require the Public Auditor to refrain from any further action in a procurement appeal upon the filing of judicial proceedings, and that the issuance of dismissal with prejudice by the Public Auditor was made in derogation of the rule. (At p. 5.) G. Chronological flow of a simple appeal. 1. Filing of Notice of Appeal a. Aggrieved Person (Appellant) must file Notice of Appeal OPA within 15 days of receipt of rejection (Final Decision) of Protest
2.
Notifying others of filing of Notice of Appeal a. Appellant must serve copy of Notice of Appeal to Agency (1) b. Within 24 hours of filing Notice of Appeal
OPA must notify Agency the appeal has been filed (1) Within 24 hours Agency notifies counsel, including AG Agency notifies Interested Parties
c. d. 3.
Agency must file Procurement Record at OPA a. Agency must file the Procurement Record within five (5) work days of receipt of the Notice of Appeal No requirement, but good practice, that Appellant be given copy by Agency
b.
4.
Agency must file Agency Report at OPA a. Agency must file the Agency Report (which includes the answer to the claims in the Notice of Appeal) within ten (10) working days of receipt by the agency of the Notice of Appeal. No requirement, but good practice, that Appellant be given copy by Agency
b.
5.
Appellants or any Interested Partys Comments on the Agency Report a. No requirement to file
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(1)
If filed, must be filed at OPA within ten (10) days after OPAs receipt of the Agency Report, with copy delivered to the Agency. Comments untimely filed may not be considered.
6.
Either party must make written request for Hearing or it may be waived. a. Written request for a hearing must also be made at least 10 days after OPA's receipt of the Agency Report. Hearing is waived if not timely requested absent unusual circumstances.
7.
Agencys Rebuttal to any Comments on Agency Report a. No requirement to file (1) If filed, within five (5) work days after receipt by OPA of the Comments to which rebuttal is directed, with copy delivered to Appellant (and, presumably, to the Interested Parties).
8.
Notice of Hearing (assumes no pre-conferences, motions, etc.) a. No time is established for OPA to set and serve a Notice of Hearing date, but must be served at least ten (10) days prior to the Hearing.
9.
Decision a. Within thirty (30) days of the hearing, a Decision and Findings shall be prepared. In her 2009 Inaugural Remarks, the Public Auditor declared, our goal is to render a decision within 90 days from the day an appeal is filed.
b.
XIX.
APPEAL REMEDIES (such as they are): A. One major reason there is not much literature about procurement issues is that the remedies available rarely make anyone whole. There just isnt much money in it for most vendors, even when vendors are vindicated, and the public purse always picks up the costs regardless who wins the protests, so lawyers dont tend to spend much time pursuing procurement matters; principle is one of the last considerations, and principal one of the first. Money: 1. Reasonable Costs are conceptually allowed to the successful protestor but not damages or attorney fees, but only if the protestant should have been awarded, or was reasonably likely to have been awarded, the contract, but
B.
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was not. a. [W[hen a protest is sustained, the protestant shall be entitled to the reasonable costs incurred in connection with the solicitation and protest, including bid preparation costs, excluding attorneys fees.... (5 GCA 5425(h).) The protestor is only entitled to reasonable costs if: (1) Either, the protestant should have been awarded the contract but was not, or There is a reasonable likelihood that the protestant may have been awarded the contract but for (a) (b) the breach of any ethical obligation or the willful or reckless violation of any applicable procurement law or regulation. (Id.)
b.
(2)
c.
In the Appeal of Guam Cleaning Masters, OPA-PA-09-009, is the first case coming to the authors attention in which a claim has been pressed to recover reasonable costs in a specific amount as a result of an improper solicitation. (1) In that case, the Appellants protest (that the chosen RFP method was improper) was denied, Appeal was brought, and in the course of the Appeal, the agency determined to cancel the RFP, and moved to dismiss the Appeal. The Appellant opposed the motion on the basis that the agencys actions caused Appellant to incur costs in submitting a proposal to for an illegal procurement, and [to] have to incur additional legal costs and incur financial hardships in protesting and appealing this matter to OPA. (Appellants Memorandum in Opposition to Motion to Dismiss, p. 2.) The Appellant and agency then apparently settled their differences, filing a stipulation which, among other matters states the agency will pay Appellant $3,050 for RFP packet, labor and preparation costs, including site visits and attending pre-bid conference; it made no specific mention nor identified any particular legal costs or other financial hardships. Based on the settlement and stipulation of the parties, the Public Auditor dismissed the appeal, thus allowing the claimed costs without, apparently, justifying what appears to
(2)
(3)
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be, on its face, a substantial amount of costs. (a) On appearances only, and in light of the specific allegation of incurred additional legal costs and financial hardships, it would seem that there should have been some stipulated statement of facts showing either that the protestor should have been awarded the contract (especially as there was no award), or, a breach of ethical obligations or a wilful or reckless violation of procurement law, as well as an accounting to substantiate that the claimed costs were, indeed, only allowable reasonable costs and, in no event, attorney fees or damages. It may be surprising that the Public Auditor, without more, condoned the payment, given her duty to promote the integrity of the procurement laws.
d.
It seems at first glance entirely unfair that a winning protester cannot even get damages if the procurement is improper (absent ethical or more than negligent behavior), yet it is not, apparently, the purpose of the remedies section to reduce mistakes in the system; indeed, there does not appear to be anything in the Procurement Law which is aimed at minimizing anything less than egregious behavior. Ineptness or incompetence are not shortcomings intended to be redressed by the Procurement Law. The inclusion of attorneys fees as part of costs is slightly different at the Appeal level in that the government (but not the protestor) may be entitled to its attorneys fees. The Public Auditor shall have the power to assess attorney fees against a protestor and in favor of the government as part of reasonable costs if the protest (not the appeal) is found to be made fraudulently, frivolously or solely to disrupt the procurement process. (5 GCA 5425(h)(2).) At the protest level, however, even if the protest was frivolous, etc., the agency cannot award attorney fees in favor of the government. (2 GAR 9101(g)(2).)
e.
2.
Damages are not allowed. Damages (over and above reasonable costs) is a contract law concept which includes such things as lost profits (i.e., direct damages) and other mutually foreseeable financial hardships (i.e., indirect damages). Bear in mind that, without award there is no contract, and without contract there are no contract damages. a. If the government wins the protest, as with the protestor, no damages are allowed in favor of the government either, such as price increases due to delays, expenses incurred to provide interim needed goods or services, or the like.
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3.
Interest on amounts ultimately determined to be due to a contractor or the Territory shall be payable at the statutory rate applicable to judgments from the date the claim arose through the date of decision or judgment, whichever is later. (5 GCA 5475.) Note this doesnt include through to the date actually paid ! The Guam Compilers Comment indicates the judgment rate is 6% and that post-judgment through to payment interest might be payable under the Civil Procedure or Government Claims codes. There is probably good policy reasoning for limiting the damages that might otherwise flow to either the bidders or government (under a non-contract theory): it puts an onus on everyone to try to facilitate a quick resolution of controversies and move on, rather than offer a carrot on a stick to extract as big a damage award as possible. a. But note that in the UK and European Union, damages, including lost profits, are and have been allowed to successful protestors. See Damages: Lessons from Harmon, and the UKs Guidance on the new remedies rules.
4.
5.
Remember the possibility, discussed in Article XVII.E above, of obtaining stay or injunctive relief to maintain status quo in a solicitation even when the automatic stay may be unavailable. This, of course, is not a money remedy but included here as a simple reminder.
C.
Other remedies: 1. Prior to award, improper solicitations and awards or proposed awards must be either cancelled or revised to comply with the law, as determined by the decision-maker (Agency, OPA or court, as the case may be). (5 GCA 5450 and 5451.) In this context, the solicitation or award is improper where it is determined administratively, or upon administrative or judicial review, that a solicitation or award of a contract is in violation of law. (Id.) a. A solicitation or award may be in violation of the law due to actions of territorial employees, bidders, offerors, contractors, or other persons. (2 GAR 9104(a)(2).) In holding that a pre-award solicitation must be cancelled, the Public Auditor said, the solicitation cannot be revised to comply with the law due to the fact that it would be difficult if not impossible to create an accurate and complete procurement record at this time. (In the Appeal of Latte Treatment Center, Inc., OPA-PA-08-008, at p 19.) Model Procurement Regulation R9-202.01 provides that a finding that the solicitation or proposed award is in violation of law will
b.
c.
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constitute a cogent and compelling reason to cancel or revise a solicitation or award. 2. Remedies after award for improper solicitations or awards depend on whether the person awarded the contract acted fraudulently or in bad faith (5 GCA 5452): a. Recognize that, generally in the law, fraudulent conduct and bad faith conduct are as different from each other as murder and manslaughter in the sense that fraud requires a specific intent to defraud (which may be satisfied by acting recklessly in disregard of intent), whereas bad faith is a lesser standard, likely including negligence or less in the usual commercial law context. Good faith, under the Uniform Commercial Act, requires a subjective element of honesty in fact and an objective element of the observance of reasonable commercial standards. (See discussion of the policy of the procurement law to act in good faith, in Article II.F.1 above.) Nevertheless, the procurement regulations exact a higher standard in the context of remedies allowed after award. Bad faith or fraud shall not be assumed. Specific findings showing reckless disregard of clearly applicable laws or regulations must support a finding of bad faith. A finding of fraud must be supported by specific findings showing knowing, willful acts in disregard of such laws or regulations. 2 GAR 9104(a)(3).) Thus, bad faith is not merely the absence of good faith, it requires a reckless disregard of the law. It would seem that people who otherwise are well advised by legal counsel or have a great deal of experience in government contracting but turn a blind eye to and engage passively or cooperatively in patently improper solicitation procedures, (that is, act in reckless disregard of the law) have some exposure to claims of bad faith. But a negligent disregard of the law (whatever that might be in any given fact situation) would not constitute bad faith. (1) The author posits that if there is a finding of fraud or bad faith on the part of a person awarded the contract, that person should be suspended or debarred from further contracting. (See, 5 GCA 5426(b).)
b.
c.
d.
If the person did act fraudulently or in bad faith, then (5 GCA 5452(a)(2)): (1) Either, the contract may be ratified and affirmed but only if in the best interests of the Territory;
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(a)
Note this should require a very heavy showing of necessity considering it is generally in the best interest of the government to uphold the integrity of the procurement laws. The finding, mentioned above, in the E-Management Court of Federal Claims case is instructive: The court notes that NHTSA fulfils an important public policy goal of the United States by its funding of transportation safety grants and that information technology (IT) is an important factor in carrying out the grant program. ... However, attaining this goal does not give NHTSA license to disregard federal procurement law, especially those provisions that are designed to ensure fair competition. (Bold emphasis added.) In the GTA Teleguam Superior Court case, supra, (SP 50-10), the Court was faced with an improperly conducted procurement (the awardee contractor was non-responsive to the IFB specifications), but nevertheless ratified the contract because only four months remained to complete the 2010 Guam census and the contract was considered essential in that operation. In this regard, the author argues that neither may a vendor disregard applicable procurement law, especially those provisions that are designed to ensure fair competition. The author suggests that it is an act of bad faith on the part of a vendor to participate in a solicitation it knows or should know is being conducted improperly; at a minimum, at least, it should advise the agency of the impropriety in a public record. i) It is the policy of the procurement law discussed above that all parties are required to act fairly and in good faith (5 GCA 5003; Article II.F.1); this is a positive duty, not merely a passive avoidance of bad faith. 2 GAR 9104(a)(2) states [a] solicitation or award may be in violation of the law due to actions of territorial employees, bidders, offerors, contractors, or other persons. The author believes this requires bidders and offerors to abide by the clear rules of the
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(b)
(c)
(d)
road even when an agency deviates from those rules, and failure to do so, in reckless disregard of clearly applicable laws, is an act of bad faith meeting the specific findings requirement of 2 GAR 9104(a)(3). ii) Given the extremely limited effectiveness of post award remedies, strict adherence to such a standard would act to mitigate the occurrence or effectiveness of connivance between a vendor and an agency to avoid proper procurement procedures.
(2) (3)
Or, the contract may be declared null and void. Upon finding after award that a solicitation or award is in violation of law and that the recipient of the contract acted fraudulently or in bad faith, the Chief Procurement Officer, the Director of Public Works, or the head of a Purchasing Agency may, after consulting with the Attorney General, declare the contract null and void or ratify and affirm it .... (2 GAR 9106(2)(a).) The contract shall be declared null and void unless ratification and affirmation is found to be in the territory's best interest .... (2 GAR 9106(2)(b).) The contract shall not be modified, ratified, and affirmed unless it is determined in writing that there is a continuing need for the supplies, services, or construction under the contract and: (a) there is no time to reward [sic] the contract under emergency procedures or otherwise; or the contract is being performed for less than it could be otherwise performed. (2 GAR 9106(2)(c).)
(4)
(5)
(b)
(6)
In all cases where a contract is voided, the territory shall endeavor to return those supplies delivered under the contract that have not been used or distributed. No further payments shall be made under the contract and the territory is entitled to recover the greater of: (a) the difference between payments made under the contract and the contractor's actual costs up until the contract was voided; or
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(b)
the difference between payments under the contract and the value to the territory of the supplies, services, or construction it obtained under the contract. [And]. The territory may in addition claim damages under any applicable legal theory. (2 GAR 9106(2)(d).)
(c)
(7)
Even if the contract is ratified, [t]he territory shall be entitled to any damages it can prove under any theory including, but not limited to, contract and tort regardless of its ratification and affirmation of the contract. (2 GAR 9106(2)(e).) Where a contract is ratified despite a violation of law, the unrecompensed bidder might get some vindication, if not damages or other relief, by bringing an action against the government employees who awarded the illegal contract, under 5 GCA 7103, as discussed in Article XXII.B, below. There is no explicit relief offered to the bidder or offeror who lost out on the award, but consider the possibility of bringing civil action against the fraudulent vendor for the economic tort of intentional interference with prospective economic advantage or other unfair competition or fraud tort. (a) Note: California, but not Guam, has a general statutory Unfair Competition law, which includes "any unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising." (California Business and Professions Code 17200). Compare that with Guams shopping list of Deceptive Trade Practices in 5 GCA 32201.
(8)
(9)
(10)
Contractors can be suspended (up to three months) or debarred (up to two years) from consideration for any government contracts for various reasons, including filing a frivolous or fraudulent petition, protest or appeal. (5 GCA 5426.) Curiously, there is no such explicit provision that requires suspension or debarment for obtaining a contract through fraud or bad faith, though 5426 is broad enough to imply such action is warranted. Suspension or debarment action is normally brought by the agency (CPO, DPW, head of Agency, etc.), and those decisions are reviewable by the Public Auditor. Any
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(11)
member of the public may petition the [agency] to take action to debar or suspend....An investigation of each petition shall be conducted promptly and a written report should be made of findings of fact and action taken. (Id.) e. If the person awarded the contract did not act fraudulently or in bad faith, then (5 GCA 5452(a)(1)): (1) The contract may be ratified and affirmed if in the best interests of the Territory; or The contract may be terminated [compared to null and void when fraud or bad faith is found], in which case the person awarded the contract shall be compensated for the actual expenses reasonably incurred under the contract (to date of termination), plus a reasonable profit, prior to termination. What is reasonable; more than originally bid? (a) The Guam Publications appeal, supra, made some confusing statements on this subject. Although the Decision found no fraudulent or bad faith act, it declared the award void (Decision, p 16.) It then decided to terminate the award (at p 17). Generally, in contract law a void contract means no contract ever legally came into existence (void ab initio, or from the start), whereas a terminated contract is one which has been prematurely extinguished. This is technically important for several reasons, including the reason that voided contracts do not look to the terms of the contract to determine damages (because there is no contract), but a terminated contract would consider damages in light of any contract provision. The comments to the Model Procurement Regulation analogue ( R9-201.01.2) indicate that the bad faith element is intended to eliminate issues whether a mere breach of contract would be sufficient to invoke the termination remedy: Generally a violation of a contact provision is not covered by [this section] and will not result in a contract award being determined illegal. ... An exception to this rule is when a contract provision implements a provision of law. In such cases the award may be found in violation of law and thus declared void. It recognizes that breaches of contracts may also invoke other remedies, e.g., contract damages or termination
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(2)
(b)
based on an appropriate clause in the contract, as opposed to the general law. (3) If the violation can be waived without prejudice to the territory or other bidders or offerors, the preferred action is to ratify and affirm the contract. (2 GAR 9106(1)(c)(1); the numbering of the subsections is inconsistent in this section.) (a) Recall the discussion of prejudice and materiality and the waiver of immaterial matters in the discussion of responsive bidders, in Article VI.J above.
(4)
If the violation cannot be waived without prejudice to the territory or other bidders or offerors, if performance has not begun, and if there is time for resoliciting bids or offers, the contract shall be terminated. Each of these three elements must be present to justify termination. If there is not enough time for resoliciting bids or offers, either formally or informally under the emergency authority, the contract may be amended appropriately, ratified, and affirmed. (2 GAR 9106(1)(c)(2).) The author asserts that this section does not override the requirements of the law relative to emergency procurement, nor making amendments beyond the scope of the contract (insertion of the word appropriately supports this assertion). If the violation cannot be waived without prejudice to the territory or other bidders or offerors and if performance has begun, the Chief Procurement Officer, the Director of Public Works, or the head of a Purchasing Agency shall determine in writing whether it is in the best interest of the territory to terminate or to amend, ratify, and affirm the contract. (a) Termination is the preferred remedy. The following factors are among those pertinent in determining the territory's best interest: i) ii) the costs to the territory's best interest; the possibility of returning supplies delivered under the contract and thus decreasing the costs of termination; the progress made toward performing the whole contract; and
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(5)
iii)
iv)
the possibility of obtaining a more advantageous contract by resoliciting. (2 GAR 9106(1)(c)(3).)
(6)
Where the person awarded the contract did not act fraudulently or in bad faith, but the contract is terminated for violation of law, the damages are determined as follows: (a) If the contract is terminated, the territory shall, where possible and by agreement with the supplier, return the supplies delivered for a refund at no cost to the territory or at a minimal restocking charge. [I]f a termination claim is made, settlement shall be made in accordance with the contract. If there are no applicable termination provisions in the contract, settlement shall be made on the basis of actual costs directly or indirectly allocable to the contract through the time of termination. Such costs shall be established in accordance with generally accepted accounting principles. Profit shall be proportionate only to the performance completed up to the time of termination and shall be based on projected gain or loss on the contract as though performance were completed. Anticipated profits are not allowed. (2 GAR 9106(1)(d).)
f.
Regardless whether the contract was awarded improperly, there is no provision penalizing the government for the improper award of the contract, no lost profits for the losing vendor, and the losing vendor has only her pride and principle. The Public Auditor has revised the outcome of a solicitation after award, in the Guam Publications appeal, supra. This is an interesting use of her power when the before and after award remedies are examined. As discussed above, before the award, the solicitation can be revised to comply with law (5 GCA 5451(b)), but there is no such option for post-award remedies. After award remedies allow either terminating or voiding the contract, on the one hand, or ratifying the contract on the other. In Guam Publications, the Public Auditor terminated the contract which had been awarded to the lowest bidder, then awarded the contract to the remaining, higher bidder. Given that the law (5 GCA 5451 and 5452) seems to require only certain specific remedies, and making an award to another bidder after the awarded contract is terminated is not one of them, then one might question the result; perhaps the appropriate result would have been to simply re-solicit.
g.
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However, in that case, the Public Auditor found the low bidder to be nonresponsive, so there was no other bidder prejudiced by this action. Award to that other bidder, then, would not be inconsistent with the principal behind 2 GAR 9106(1)(c)(1) which allows an award to be ratified when there is no prejudice to other bidders. The author thinks the Public Auditor probably should be able to order the award be given to the next responsive and responsible bidder and feels doing so is not inconsistent with the overall policies of the procurement laws. (See, e.g., 5 GCA 5212(d), which allows the government to procure supplies or services, without re-bid, from the next lowest bidder when the lowest bidder has defaulted under its contract.) 3. Query if person awarding contract acts in bath faith: The issue as to which remedy after award applies turns on whether the person awarded the contract acted in good faith. Suppose the person who was awarded the contract acted in good faith but the person awarding the contract acted in bad faith. Is there any remedy against the public official who performs procurement duties in bad faith? There does not appear to be any recourse under the Procurement Act, unless the bad faith action is based on a violation of the procurement law, as discussed in Article XXII.B. a. The Alaska Supreme Court has ruled that a procurement official enjoys only qualified immunity of office at common law in the course of evaluating a bid, which is no bar to claims of bad faith. This is offered here as food for thought, not as suggestion that it is, or is not, Guam law. (1) James Weed et al. vs Bachner Company Inc., and Bowers Investment Company, Alaska Supreme Court Opinion No. 6475 - May 14, 2010. The Courts introduction to the case summarized it this way: In this case, a disappointed bidder sued the procurement officials individually after the administrative hearing officer in the bid protest proceeding found serious improprieties in the bid evaluation process. The officials moved for dismissal on the ground that they were absolutely immune. The superior court held that they were protected instead by only qualified immunity, which applies only to actions taken in good faith. (3) Its test of immunity is described this way: In Aspen Exploration Corp. v. Sheffield, [citation
(2)
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omitted] we first set out a three-factor test for determining whether an official is entitled to absolute or qualified immunity. The three factors we consider are: (1) the nature and importance of the official function to government administration; (2) the likelihood that the official will frequently be accused of wrongful motives in performing this function, and how easily the officer can defend against those accusations; and (3) the availability of other relief to an injured party. (4) In a lengthy analysis, the Court concluded, This is not a situation where unfettered discretion is crucial to the best interests of the public; indeed, the procurement officers discretion is designed to be highly restricted. Moreover, there is no evidence that procurement officials are often sued in tort, and the bid protest process makes it likely that the officials will be well-prepared to defend suits when they do arise. Finally, as we have noted before, we have generally extended absolute immunity only to the highest levels of government officials, and afforded only qualified immunity to lower-level officials. [Citation omitted.] Thus, we conclude that, in defending against common law claims arising out of actions taken in the bidding process, procurement officers are entitled only to qualified immunity. 4. It is obvious, then, based on the discussion above of pre- vs. post-award remedies, that the timing of the award is critical, given that remedies available turn on whether a determination that the solicitation or award is in violation of law is made before or after award. (And note, the determination of the award is also critical for determining the timing of the automatic stay (5 GCA 5425(g), and see Article XVII on automatic stay above) and the timing for release of proprietary and confidential information from an RFP (see, generally, 2 GAR 3114, and Article VIII.D.14 above regarding Requests for Proposals.) a. So, what then is an award? Unfortunately, there is no definition in the Procurement Act or regulations that defines or even describes what is meant by the term award. There is no requirement that an award take any particular form or substance, but everyone talks of an award as if there were some commonly agreed meaning. Probably the best articulation of the lore is that an award is the final declaration by an agency to the bidders, offerors or public naming the winner.
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b.
But there are other hints as to what an award is in the law : (1) For instance, we know award does not mean the making or execution of a contract, because the law speaks of award of a contract (e.g., 5 GCA 5452(b)), not the making of a contract; it is not the contract that signals the shift in available remedies, but the award. Another hint is the use of the modifier proposed in 5 GCA 5451 the pre-award remedy section: a solicitation or proposed award. This is actually quite a curious use of the term proposed. If we are having a hard time with determining what an award is, what must a proposed award be? It must imply some critical juncture in the negotiation process when there is some kind of near agreement subject to a condition subsequent to the proposal of the award, before the finalized award. The regulations require notice of award be sent to the successful bidder in an IFB (2 GAR 3109(q), which would hardly be a necessary act to perform if the successful bidder had already signed all necessary documents. And, perhaps most illustrative, in an RFP, if compensation, contract requirements, and contract documents can be agreed upon with the best qualified offeror, the contract shall be awarded to that offeror. (2 GAR 3114(l)(4)(B).) This says a contract must follow coincidently with award upon agreement on essential terms; once there is agreement, the award shall be made by contract. (a) In contract law, if price and all other essential terms have been agreed upon, a contract is made (as discussed below, it may not be enforceable, but it does come into being). This provision simply reflects contract law that when the parties have agreed upon all essential terms, a contract is the consequence of that agreement (the contract shall be awarded).
(2)
(3)
(4)
(5)
All of these hints indicate that an award is not embodied in the contract itself (that is it is not a legal element of contract formation), but in something that is nascent in the sense that it comes prior to contract execution. Award, then, is an element of procurement, not contract, law. (a) Framed as an analogy, award is that moment when
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an artist takes one last step back to assess the completed canvass just before putting her name to the painting. It resembles a meeting of minds, but only in the sense of an intent existing solely in the mind of the offeree (the government), bearing in mind that the bid or proposal process is intended to illicit, whether by auction or negotiation, a binding offer by the bidder or offeror which only needs acceptance by the government to complete contract formation. (6) As mentioned at the beginning of this Primer, procurement law, though wrapped in its own language and custom, is a subset of the more general and overriding body of contract law. In contract law terms, the author concludes that the procurement law references to an award of contract must mean an acceptance of the offer. (a) Acceptance is, in contract law, the analytical final act of contract formation, the moment when the government has formed the intent to accept the terms of agreement. This concept is not well understood in the population thoroughly and has led to a lore that a contract is only some written signed document. In some instances a writing or other manifestation of agreement is required to make a contract enforceable; but that does not limit the legal conception of contract formation. For instance, under what is known as statutes of fraud (originating in English law way back in the early 1600's), any agreement to convey land must be evidenced in writing if it is to be enforced in law or equity (to minimize fraud by lying). Although communication of acceptance is not required in every case to form a contract (see, e.g., the discussion of implied-in-fact contracts in Cibinic & Nash, pp 237 et seq.), the communication of acceptance can be inferred from circumstances; the Procurement Act does not specify any formality as to what constitutes an acceptance or award. (See, Corbin on Contracts, One Volume Edition, West Publishing Co. 67, When Notice of Acceptance is Necessary.)
(b)
(c)
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(7)
An Arizona Supreme Court case noted the distinct phases of contract formation discussed in this Article. The majority decision and the dissent illustrate the tension in finding any bright lines. See, Ry-Tan Const. v. Washington Elementary No. 6, (2005) 111 P. 3d 1019. (a) We granted review primarily to consider whether a school district is contractually bound when it has accepted a construction bid but has not yet executed a written contract. More than fifty years ago, this court addressed the issue of contract formation involving public entities in Covington v. Basich Brothers Construction Company, 72 Ariz. 280, 233 P.2d 837 (1951). ... The Commission accepted Basich's bid and sent a letter awarding it the contract. Under the terms of Basich's proposal, the company had ten days to execute a contract after receiving notice of the award. [Basich did not execute the contract within 10 days, and the Commission revoked the award.] We held that the Commission could revoke the award because "a contract with a public agency is not binding on the public agency until a formal contract is executed," id., and that "the commission [had] the right to reject any and all bids at any time before a formal contract [was] entered into." Id. at 286, 233 P.2d at 840-41. Because no contract had been formed, the parties should be returned to their pre-award positions and the deposit returned to Basich. ... If we apply Covington's "bright-line" rule to the facts of this case, the District must prevail. The court of appeals also held that Covington does not control this action because "the procedures and formalities surrounding contract formation and the awarding of public contracts in Arizona have changed [since 1951]." Ry-Tan Constr., 208 Ariz. at 387 25, 93 P.3d at 1103. The court noted that, since the Covington decision, "Arizona has adopted 27 of the Restatement (Second) of Contracts." Id. That statement is accurate but does little to advance our analysis. 17 Section 27 of the Restatement (Second) of Contracts provides that: Manifestations of assent
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(b)
(c)
(d)
(e)
that are in themselves sufficient to conclude a contract will not be prevented from so operating by the fact that the parties also manifest an intention to prepare and adopt a written memorial thereof; but the circumstances may show that the agreements are preliminary negotiations. [Note that the Restatement concerns private contracts. Here the Court was concerned with the application of the law of private contracts to public contracts.] (f) It is true that, in most contexts, section 27 captures a well-established rule of contract law. This rule, however, was not unknown to Arizona courts at the time we decided Covington. By that time, this court had already essentially adopted the Restatement view when it held that if parties expressed an intent to be contractually bound, they would be deemed so bound, even if the requisite formalities of acceptance were not explicitly followed. We detect no change in public policy that would lead us to set aside Covington's bright-line rule. In situations such as this, public funds are at stake. It is vitally important that the elected officials responsible for the disbursement of such funds retain the flexibility needed to make decisions in the public's best interest. Allowing a public entity an opportunity to reject a bid until execution of a formal contract occurs provides additional flexibility to respond to conditions that arise after the bid award and before execution of the contract, as occurred in this case, and further opportunity to consider the public interest. The dissenting judge said: I part company with the majority, however, on whether the Arizona School District Procurement Code ("the Code"), Arizona Administrative Code ("A.A.C.") R7-2-1001 to -1195, displaces the Covington common-law rule. I would hold that under the Code a contract is formed when a school district awards a contract, not at subsequent formal execution of the contract. I therefore respectfully dissent. The Code sets forth a detailed procedure for the solicitation and award of construction contracts. The starting point is an invitation for bids ("IFB"). A.A.C.
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(g)
(h)
(i)
R7-2-1024. The IFB must include, among other things, all "contract terms and conditions." A.A.C. R7-2-1024(B)(1)(g). Any amendments by a district to the IFB's proposed contractual terms must occur "within a reasonable time before bid opening." A.A.C. R7-2-1026(C). Thus, bidders know in advance all terms of the contract other than price; nothing is left to negotiation at the time of award. (j) The Code also allows the district to reject specific bids without canceling the solicitation if the bidder is determined to be "nonresponsible" or the bid is "nonresponsive." A.A.C. R7-2-1075(A), (B). But once again, the Code requires that any such action be taken before an award is made. See A.A.C. R7-2-1076(A) ("The school district shall make a determination that a bidder or offeror is responsible before awarding a contract to that bidder or offeror."). The majority recognizes that these Code provisions can be read as limiting a school district's ability to cancel a pending solicitation, but declines to interpret the regulations "strictly" because "nothing in the Code expressly prohibits a public entity from withdrawing a bid after acceptance of the bid but before award of a contract." But this approach fails to address the real question posed by this casewhether a district may unilaterally cancel the solicitation after award. There is no dispute in this case that the construction contract was awarded to Ry-Tan. The Code expressly provides that the IFB can only be cancelled for the advantage of the district "before award." A.A.C. R7-2-1074. Today's holding effectively amends this rule to provide the district the right to withdraw the solicitation at any time before "execution" of the contract. Had the framers of the Code desired such a result, they surely could have said so more directly. The majority's ultimate holding that a district is free until the execution of a formal contract document unilaterally to decide, for any reason or for no reason at all, that it will not go forward with the contract also cannot be squared with several other
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(k)
(l)
(m)
"particular provisions" of the Code. For example, the Covington rule is inconsistent with A.A.C. R7-2-1131(A), which provides that "the contract shall be awarded to the lowest responsible and responsive bidder." Under the majority's view, the low bidder is not awarded a "contract," but merely a possible opportunity to enter into a contract, an opportunity revocable at the whim of the district. (n) In short, in my view, the proper reading of the Code is that the district requests offers to enter into a contract by issuance of the IFB. At the time of award, the district accepts the offer of the bidder to enter into the advertised contract at the price specified in the bid. The award is thus the point at which both sides the bidder and the district have a meeting of the minds. ... The district may take its time before award to carefully consider whether it is in its best interests to cancel the solicitation and may carefully review the qualifications of the low bidder, but once an award is made a contract is formed.
(8)
There is nothing in the Procurement Act which states a uniform requirement for a communicated intent to be made by the government to formally make a contract. (a) In the case of an IFB, as noted above, notice of award to the successful bidder is expressly required to communicate acceptance. This makes sense inasmuch as the governments evaluation takes place without negotiation of price or terms. But not so in the case of an RFP. In the case of an RFP the acceptance of the proposal is presumed to have been communicated by the conclusion of negotiated agreement between the government and the best qualified offeror on the terms of compensation, contract requirements and contract documents. Just when that communication of agreement has occurred in the process is less clear, but it cannot be when a notice of intent is given, because, unlike the required notice of award to a bidder, there is no requirement that notice of intent to award be given to the offeror. i) Indeed, without reference to when or whether any such notice of intent is given,
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(b)
the regulations require, [a]t the conclusion of negotiations resulting in the award of the contract, ... [the government] shall prepare a memorandum setting forth the basis of award.... (2 GAR 3114(m).) Again, this language supports the conclusion that award is acceptance: at the conclusion of negotiations resulting in... Acceptance results in contract, and negotiation results in award and contract. ii) It would appear, therefore, that in the context of an RFP, it is the conclusion of negotiations that determines acceptance and the resulting award and concomitant contract. Thus, when all that is left for the parties to do is complete the documentation and do whatever else is necessary to manifest their agreement, the parties have already determined the award. Note the conundrum this can present to an Appellant. If the Appellant seeks to argue, in an RFP protest, that withheld or protected information should be released because an award has effectively been made at the time the protest was made, the concession (if accepted) that an award has been made denies the Appellant of the more beneficial pre-award remedies.
iii)
(9)
Thus, whether an award, that is, acceptance of the offer, has been made is a question of fact and not any bright line clearly specified in procurement law, except when occasionally expressed as a requirement that a notice of award must be given. (a) As discussed above, the author believes some of the confusion regarding what it is that makes an event an award stems from the differences between contracting protocols, between bids and offers. Recall that an IFB is a type of contract derived from the law of auction. In auctions, all the terms are given and the only thing left to do is determine price. Bidders call out their price (can I get a bid?). That is why submission in an IFB are call bids. Under auction law, the contract is made on the fall of the
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(b)
hammer. But, to evidence the contract thus made and give it enforceability, it is common practice to then formally sign a contract. (c) Offers made in response to proposals, on the other hand, are not so clear cut. There is no hammer fall as various terms are negotiated back and forth. In the usual negotiated contract, a contract is made when the parties reach mutual agreement, and this must be discerned from all the facts and circumstances. Typically, it is indicated by a handshake or somesuch, but can also be discerned from the stream of correspondence. But since a written contract is usually executed as an integral part of the contract formation, award and contract execution become nearly identical in practical effect, if not by definition. Certainly, it can be said that the contract is the award if there is any ambiguity to the contract formation, but in other cases it is not so clearly the same event. From this, the author suggests that an award is simply a point in time when the parties are irrevocably committed to contract formation and all that remains is to spread ink. This is a useful practical definition because, as will be seen, in procurement law it is not so important to define what an award is in any particular case, as when it occurred. Since contract execution is an act solely within the control of the parties, this practical definition might be used to mitigate those instances when the contracting parties want to frustrate other offerors or bidders whose procurement rights are contingent on the timing of award. Where timing of award can be manipulated to change the balance of equities, the court should be more willing to scrutinize whether the award, the irrevocable commitment of the parties to contract, is already made even though a contract may not yet be formally executed.
(d)
(e)
(10)
Cibinic and Nash (at pp 952 et seq.) extensively discuss the nature and timing of awards in the Federal acquisition context. (See, also, their extensive discussion of contract formation principles in the context of Federal procurement at pp 203 et seq.) It must be appreciated, though, that there is significant difference in that context in that, while both
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MPC/Guam Procurement Act and FAR require a notice of award in an IFB, the FAR, but not the Guam Procurement Act, also requires the contracting officer ... to make the [RFP] award with reasonable promptness by transmitting the notice of award.... (Id., p 952.) Nevertheless, their discussion buttresses the authors conclusion that what is meant by use of the term award in the procurement context is, in a strictly legal sense, acceptance and must be analyzed in that legal context. (a) As a general rule, when written or oral discussion have been held and BAFOs [Best and Final Offers] requested, award is made by acceptance of a BAFO [in the manner required]. (Id., p 954.) To be binding, an acceptance must contain a manifestation of present intention to be bound. [Referencing a Comptroller General case]: In order for a binding contract to result, the contracting officer must unequivocally express an intent to accept an offer. ... [I]t must appear that both parties intended to make a binding agreement at the time of the acceptance of the contractors offer. (Id., pp 224225.) The authors then turn their discussion to several cases that, the author suspects, will surprise both legal and non-legal readers as to the results of when acceptance had, in those cases, been found to occur or not occur. The authors take away confirms his statement that acceptance and by extension award depends on an analysis of all the facts of the situation and is not some simple minded bright line event.
(b)
5.
Note: post-award prejudice and a proposal to rectify it: Because an award can be affirmed even if there were significant improprieties in the solicitation process, including fraud, a rightful bidder or offeror can sustain substantial prejudice by bringing an appeal after an award has been granted; indeed, what, other than principle to point out a defective procurement, would be the incentive? a. This makes the time gap, referred to previously, between the rendition of the protest decision and the time available to appeal absolutely critical; remember, the automatic stay expires on the decision and is not revived until the appeal is filed. If the protestor is unable to file appeal immediately, although the law allows 15 days to do so, by awarding the contract in the interim, the government can effectively rob a rightful protestor of the fruits of her
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protest. This seems a highly unfair circumstance. (1) The author would propose, when a protest is brought before an award is made, that the government be stayed from awarding any contract under the protested solicitation until: either it has, after giving notice of decision on the protest, given notice to all bidders of intent to award (identifying the intended awardee), and at least two business days pass; or, the time for filing an appeal has lapsed; whichever is later. The point of the two day period would be to allow an interested party to file a notice of intent to appeal with the OPA which would have the effect of extending the automatic stay until the 15 day filing period has lapsed, though there would no point in requiring such a filing in that period. Of course, the formal appeal must still be filed within the normal 15 day period. This would preserve the remedies of the parties and not do any substantial injury to the procurement process, particularly when it is recalled that any frivolous filing intended merely to delay the procurement process is sanctionable.
b.
It might be noted that the European Union has had a Directive in place for several years that mitigates the post-award prejudice in a manner similar and consistent with this proposal. The EU Directive is somewhat complicated but in a nutshell requires a 10 day notice of an intent to award before concluding the contract. The original proposal is discussed in Commission Proposal for an Amending Directive on remedies (14 June 2006) . This time period is referred to as a standstill period, and is more completely and simply discussed, to include interim 2007 amendments to the Directive, in the UKs Guidance on the new standstill rules.
D.
Alternate injunctive action 1. The right of any taxpayer to bring an action to against improper spending is discussed more fully below, in Article XXII.B. Here it should be noted that the injunctive relief available under that law may prove to be an attractive alternative remedy to protest and appeal. If, for instance, a person has for whatever reason failed to protest within the time allowed, the injunctive relief available under that law could, in appropriate circumstance, curtail an illegally effected procurement. The appropriate circumstances would include absolute certainty that there has been a significant shortcoming in the procurement process, bearing in mind that there may be exposure to having to pay attorney fees if the action is not soundly based. The upside may be, given absolute certainty of wrongdoing, a party in such action could have the attorney fees spent in the action recovered, which is not available under the protest and appeal procedures. The author is doubtful,
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however, that such an action should be brought by an aggrieved person in cases where there are opportunities to proceed by way of protest and appeal, due to the exhaustion of administrative remedies doctrine. E. Request for Reconsideration 1. Unlike protests, there is no specific regulatory authority for asking the Public Auditor to reconsider her Decision. 5 GCA 5425(f) says her decision is final unless a person adversely affected takes appeal to the Superior Court, but does not expressly prevent her reconsideration and, theoretically, if she changed her mind she could then issue a final final decision. In In the Appeal of [IBSS vs GPSS(2)] the Public Auditor did respond to a Request for Reconsideration, though the Request was pretty much summarily denied and the response seemed to the author as though she was uncomfortable in even considering or rendering it.
XX.
Some issues relating to contract performance A. In this Article, we assume there has been no procurement controversy and a contract has been awarded and entered into. Performance Bonding: (Remember: bond means security.) 1. The purpose of requiring security is generally to provide the government a source of ready funds if the contractor fails to perform and the government suffers damages because of that breach. It is not intended to constitute a penalty nor provide funds where there has been no breach of the contract. a. The fundamental notion is one of contract law. In contract law, a party who materially breaches (fails to render the agreed performance) is liable for the reasonably foreseeable damages that result from the breach, including an agreed liquidated amount where the damage is certain but hard to calculate. To the extent the bonded amount exceeds the amount of damages suffered, the excess security is released. To the extent the bonded amount is insufficient to cover the damages, the contractor remains liable to pay the deficiency. Beware that if there is a call on the security, the security provider will seek to recover what it has paid out from the contractor. Discussion of contract damages and other remedies, as well as the law of surety, is well beyond the scope of this paper.
B.
b.
c.
2.
Services or supplies. As discussed above in Article V.B on Bid Bonding, the bid security for supplies and services is intended to carry over, without
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release, to cover the period until delivery of the supplies or services. Thus, in this case, the bid bond also serves as the performance bond, and no separate performance bond is required. (5 GCA 5212(g).) a. Note, however, that some solicitations require service and warranty and perhaps other conditions, and to the extent those conditions cover any executory contract performance obligation after delivery, this provision does not provide the full security for contract performance that the government should reasonably require. Note, again, as with bid bonds, that the regulations have not taken into account the change in the law, and continue to purport to allow, a performance bond for contracts for supplies or services. (See, 2 GAR 3102(f) and 3109(c)(4).) This regulation is nullified by the changes to the law, however.
b.
3.
Construction contracts. As with the wide variety of management and contract types, the considerations regarding the need of bonding for construction is varied and dependent on unique circumstances. a. Performance bond: A performance bond indemnifies the territory against loss resulting from the failure of the contractor to perform a construction contract in accordance with the plans and specifications. 2 GAR 5104(1)(b).) A performance bond is required for all construction contracts in excess of $25,000 in the amount of 100% of the contract price, but it can be reduced in some circumstances to as little as 50% of such value, or more as portions of the work is completed. ( 5104(1)(a).) Payment bond: A payment bond guarantees payment and protection for those furnishing labor and materials to the contractor or its subcontractors for the work bonded. The payment bond is required in the same percentage amount, and can be reduced, as with performance bonds. (2 GAR 5104(2).)
b.
C.
Contract disputes. Contract disputes concern a controversy between a contractor and the government arising after the solicitation and award, including without limitation controversies based upon breach of contract, mistake, misrepresentation, or other cause for contract modification or rescission. (5 GCA 5427(a).) The word controversy is meant to be broad and all-encompassing. It includes the full spectrum of disagreements from pricing of routine contract changes to claims of breach of contract. (2 GAR 9103(b).) 1. Who hears contract disputes? a. The Chief Procurement Officer, the Director of Public Works, the head of a purchasing agency, or a designee of one of these officers is
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authorized, prior to commencement of an action in a court concerning the controversy, to settle and resolve a controversy described in Subsection (a) of this Section. (5 GCA 5427(b).) (1) This provision clearly delegates authority to settle and resolve contract controversies between contractors and the government to procurement officials. How is that substantively different from a claim based on a contract within the purview of the Government Claims Act (see, 5 GCA 6105(a), which for the purposes of the Claims Act, waives government immunity for all expenses incurred in reliance upon a contract to which the Government of Guam is a party)? The procurement regulations, in the context of the delegation of settlement and review authority over contract controversies, proclaim [t]he settlement or resolution of controversies involving claims is subject to the Government Claims Act. (2 GAR 9103(c)(2).) However, the Supreme Court has recognized that this language is a relic from prior law, in the Pacific Rock II case, supra, at footnote 3. The Procurement Regulations, moreover, create more confusion by stating, Subject to Subsection 9103(c)(2) of [the Claims Act], unless a provision of the contract specifies that the authority to settle and resolve controversies and to issue decisions is reserved to the Chief Procurement Officer, the Director of Public Works, or the head of a Purchasing Agency, such authority is hereby delegated to the Procurement Officer. (2 GAR 9103(c)(1).) These are unsatisfactory and confusing provisions. If, indeed, the Claims Act prevails, only a Claims Officer could settle and resolve such contract disputes, notwithstanding the provisions of the Procurment Law.
(2)
(3)
(4)
2.
Procurement Act or Claims Act? As noted above, the simple matter of resolving contract disputes is muddied by possible confusing jurisdictions and procedures caused by possibly conflicting provisions between the Procurement Act and the Government Claims Act. a. In Pacific Rock I, supra, the Guam Supreme Court reviewed the inconsistencies between the Claims Act and the Procurement Act, and came down on the side of the Procurement Act as the controlling regime. It said, [s]trict compliance with the Claims Act would mean that party must twice seek administrative relief when litigating a cause of action under a procurement contract. First a
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party would be required to exhaust the administrative remedies prescribed by the Procurement Law, seeking settlement with the CPO and obtaining a final decision, then it would have to follow Claims Act procedures.... This result produces policy violations which the Procurement Law expressly proscribes.... Thus we hold that a party who seeks judicial relief from an administrative action taken pursuant to the Procurement Law should not seek relief under the Government Claims Act. (At 19, and see 23, 26, 27.) b. Pacific Rock II, supra, on the other hand, restricted the effect of Pacific Rock I to administrative review, holding that the administrative contract dispute procedures must first be exhausted under the Procurement Law, and any appeal to the courts thereafter must be brought under the Claims Act, with its requirement that a claim, separate from and subsequent to the procurement appeal process, must first be lodged with the Attorney General. ( 33-36.)
3.
Contract dispute procedure. The Procurement Act contemplates that contract controversies will, where possible, be resolved by mutual agreement. (5 GCA 5427(c).) The procurement regulations flesh this concept out as follows: a. It is the territory's policy, consistent with this Act, to try to resolve all controversies by mutual agreement without litigation. In appropriate circumstances, informal discussions between the parties can aid in the resolution of differences by mutual agreement and are encouraged. If such informal discussions do not resolve the controversy, individuals who have not participated substantially in the matter in controversy may be brought in to conduct discussions if this is feasible. Independent committees and panels which review controversies expeditiously and informally with a view to fair settlement possibilities also are encouraged at this stage. (2 GAR 9103(a)(1).) Where mutual agreement does not result in a resolution to the governments satisfaction, it must promptly issue a final written decision stating the reasons for the decision and advising the contractor of its rights of review. (5 GCA 5427(c).) (1) Again, the regulations take an unfounded liberty with the law here, saying, the Procurement Officer shall, after written request by the contractor for a final decision, promptly issue a written decision. This provision is useful because it provides a remedy if the decision is not timely made after such a request, as next discussed.
b.
c.
If the government does not promptly issue a decision, the contractor

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can request one, and the agency has 60 days from that request to issue the decision, upon failure of which the contractor can proceed as though there was an adverse decision taken. (5 GCA 5427(f).) (1) Note that this is in contrast to a Protest of a solicitation, where a protester cannot proceed until the agency renders a decision. The author suggests a similar provision should be added to the protest procedure.
D.
Appeals (to OPA) from Contract Disputes. 1. A contract dispute decision is final and conclusive as between the contractor and the government unless fraudulent or unless the contractor timely appeals the decision to the OPA. (5 GCA 5427(e).) The contract dispute appeal must be filed by an aggrieved contractor within 60 days of receipt of the contract dispute decision or, if no decision is promptly forthcoming as expected, within 60 days after the contractor gives the government agency a written request for final decision. (5 GCA 5706(b); see, 2 GAR 12301(a).) Unlike protest disputes, in a contract dispute, if the government fails to render a decision within 60 days after a specific request for a decision, made by the contractor, the contractor is allowed to appeal as if an adverse decision had been received. (5 GCA 5427(f).) In effect, this provision provides finality by presuming an adverse decision when the agency fails to timely respond to a request for decision. a. Guam Pacific Enterprises, supra, (OPA-PA-09-003) was a contract dispute appeal. In the authors respectful opinion, the Public Auditors decision erred in overlooking this provision. From the IBSS vs GPSS [No. 1] Appeal (supra, OPA-PA-08-003), the rule was clear that the OPA does not have jurisdiction to hear a protest dispute until there is a decision rendered on the dispute, even in the face of clear evidence that the agency was not going to render a final decision. In Guam Pacific Enterprises, no contract decision was ever rendered, nor did the contractor at any time specifically request such a decision, so the adverse decision presumption was never triggered. Nevertheless, the OPA took the case for review, and held the appeal was timely, simply because it became clear that there would not be a final agency decision. (Decision, at p. 6.) It seems not just inconsistent but incongruous with the IBSS [No. 1] Appeal decision to allow an appeal where it is clear that there
2.
3.
b.
c.
d.
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would not be a final agency decision in the contract context, where a protestor has the power to force a presumptive final decision, but deny it in a procurement protest context where the protestor has no power to force a final decision, presumptive or otherwise, except by petitioning the OPA for a motion to compel or bringing a writ of mandate action in the Superior Court. The author actually appreciates taking the review, as the OPA did in the Guam Pacific Enterprises Appeal, and wishes the same result would apply to procurement protests. (1) Perhaps the basis for taking the review in the Guam Pacific Enterprises Appeal in the contract dispute context is the quizzical language of the Supreme Court in Pacific Rock II, supra. The Supreme Court said, where there is neither a written request for a final decision within sixty days submitted nor an agreement between the parties (through words or conduct) to prolong the final decision beyond the sixty days ... a final decision should still be rendered within the sixty days. ( 40.) But, that should does not translate into a mandatory limitation nor confer finality of decision, without citation to specific authority or reasoning.
4.
There are no specific rules or regulations adopted concerning the manner of taking a contract dispute appeal to OPA, but it could be expected that the procedure and form would substantially mirror solicitation protest procedure. Guam Pacific Enterprises, supra, was the first contract dispute appeal to reach the OPA Decision stage and it did, generally, follow along general procurement appeal procedure. The main substantive difference is that, rather than Procurement Law issues, contract disputes involve, obviously, contract law, a subject matter OPA has not had much experience with to date. a. The central contract dispute in Guam Pacific Enterprises concerned the liquidated damages provisions of a typical supply contract. The Appellant argued it was unfairly assessed liquidated damages when it sought, and was denied, extensions of time to perform based on the inability of its stateside supplier to meet anticipated schedules. The Public Auditors Decision, however, relied solely on a strict application of procurement law and did not consider contract law implications in discussing the efficacy of the liquidated damages clause. It said, [t]he propriety of an assessment of liquidated damages is dependent on the presence of a liquidated damages clause in a contract and governed by the wording of that clause. (P. 8.) The only evidence considered was a history of strict application
5.
b.
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of the liquidated damage provision by the agency, which the Decision found to be evidence that the liquidated damages clause would not be waived. (Pp 9-10.) c. In contract law, the propriety of an assessment of liquidated damages is dependent on factors beyond, and not governed by, the wording of the clause, and would apply regardless of waiver. (1) Under general contract law, only damages, and not penalties, are allowed as compensation. (See, 20 GCA 2201, et seq.; 2281) The Guam Uniform Commercial Code, Title 2, which provides substantive supplementation of the Procurement Law as mentioned above (5 GCA 5002), governs the efficacy of liquidated damages in the sale of goods. 13 GCA 2718 says that the parties to an agreement may liquidate damages (that is fix the amount of damages for a particular breach) in the agreement but only at an amount which is reasonable in the light of the anticipated or actual harm caused by the breach, the difficulties of proof of loss, and the inconvenience or nonfeasibility of otherwise obtaining an adequate remedy. As Comment to the UCC version of this provision elucidates (see, Appendix XX, UCC 2005 Edition), this provision sets forth explicitly the elements to be considered in determining the reasonableness of a liquidated damage clause. The UCC 2005 Comment adds further guidance, saying, [t]his section thus respects the parties ability to contract for damages while providing some control by requiring that the term be reasonable under the circumstances of the particular case. Thus, the efficacy of a liquidated damages includes evidence beyond the mere presence of a liquidated damages clause in a contract of supply. The fact that the agency uniformly enforced the liquidated damages clause, rather than going to course of conduct as the Decision focused upon, could have been evidence that its application, without regard to the circumstances of the particular case, constituted a penalty or forfeiture and not allowed contract damages. Without discussing the enforcability of the liquidated damages clause, the Public Auditor found there has been no evidence presented by GPA demonstrating an urgent need for exact day delivery for all eight purchase orders... Furthermore, the ubiquitous nature of the liquidated damage clause, which must be accepted when in a bid or else the bid
(2)
(3)
(4)
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is non-responsive, coupled with the uniform extraction of liquidated damages regardless of particular circumstance, raises an issue of adhesion and unconscionability. An adhesion contract is one that is totally one-sided due to superior and overwhelming bargaining structure, though admittedly typically (but not exclusively) applied to noncommercial transactions. Unconscionability is specifically made a part of the Guam UCC, 13 GCA 2203, and, while again more often invoked in consumer cases, is not by its own language restricted to non-commercial contracts. As the Comment to UCC 2-302 (2005 Edition) notes, [c]ourts have been particularly vigilant when the contract at issue is set forth in a standard form. The principal is one of prevention of oppression and unfair surprise and not of disturbance of allocation of risks because of superior bargaining power. The basic test is whether, in the light of the general commercial background and the commercial needs of the particular trade or case, the term or contract involved is so one-sided as to be unconscionable under the circumstances existing at the time of the making of the contract. d. The author here is not judging the merits of the Guam Pacific Enterprises Decision, indeed he reaches the same result on the substantive issue, but is merely pointing out that, in an appeal to OPA from a contract dispute, the Public Auditor is bound to consider all the broader contract law and not just the Procurement law. (1) Indeed, the Guam Pacific Enterprises Decision did key in on the broader good faith and fair dealing requirements of the UCC and the Restatement of Contracts to reach a result that would have been reached under a scrutiny of the efficacy of the liquidated damages clause, and without even referring to 5 GCA 5003, requiring all parties involved in the performance or administration of government contracts to act in good faith. (See, discussion of Good Faith and Fair Dealing in the Decision, pp. 10 et seq.) In so doing it, in effect, invoked the limitations of a proper liquidated damages provision and the adhesion and unconscionability notions discussed above: (a) There are a number of instances in which GPA has dealt from its superior bargaining position to administer GPSs contracts in a one-sided manner, notwithstanding that, GPA has insisted GPE rigidly adhere to the contract delivery dates.
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(b)
GPA holds a superior economic and bargaining position and has an obligation, particularly to small local contractors ... to properly exercise its discretion and to administer its contracts fairly and in good faith.
XXI.
Getting paid, or not, as the case may be A. Prompt Payment Act (5 GCA 22501, et seq.). Thats the official title, not reality. 1. Interest a. Each government agency which receives property or services from a business but which does not make payment for each such complete delivered item of property or service by the required payment date, shall pay an interest penalty to such business on the amount of the payment which is due as specified in this Article. (5 GCA 22503(a).) Interest shall be computed at the same interest rate assessed on unpaid income taxes owed by taxpayers. (5 GCA 22503(b).) Any amount of an interest penalty which remains unpaid at the end of any thirty-day period shall be added to the principle amount of the debt and thereafter interest penalties shall accrue on such added amount. (5 GCA 22503(c).) Claims for interest penalties which a government agency has failed to pay may be filed under statutes governing contract disputes with the government of Guam. (5 GCA 22506(a).) Interest penalties shall not continue to accrue after the filing of a claim for such penalties, or for more than one (1) year, whichever comes first. (5 GCA 22506(b).) Note a couple of things. First, although called a claim, demands for payment of interest fall under the rubric of contract disputes, procedurally, so are not pursued under the Government Claims Act procedures. Second, you can only get up to one years interest, which aint much ado about anything and does absolutely nothing to assure prompt payment.
b.
c.
d.
e.
f.
2.
Discounted settlements a. If a business offers a government agency a discount from the amount otherwise due under a contract for property or services in exchange
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for payment within such specified period of time, the government agency may make payment in an amount equal to the discounted price only if payment is made within such specified period of time. 5 GCA 22504(a).) b. If youre willing to take pennies on the dollar for your marginal contract profits, heres your chance.
B.
Non Prompt Payment Act Interest 1. Interest on amounts ultimately determined to be due to a contractor or the Territory, based on a contract dispute, shall be payable at the statutory rate applicable to judgments from the date the claim arose through the date of decision or judgment, whichever is later. (5 GCA 5475.) a. In Sumitomo Construction, Co., vs. Government of Guam, CV 158999, the Superior Court judge declared that prejudgment interest is payable to a contractor in a contract dispute based on that Procurement Code provision notwithstanding the Claims Act does not allow prejudgment interest in tort claims. The Supreme Court, in Sumitomo Construction, Co., vs. Government of Guam, 2001 Guam 23, affirmed the Superior Court on that issue but held it was wrong to also award post judgment interest, because there was no statutory waiver of sovereign immunity for post-judgment interest such as that conferred by 5475 for pre-judgment interest.
b.
2.
This rate is currently 6% and this authority for interest is not limited to one year.
C.
Promissory notes (5 GCA 22415) 1. Any creditor of the government of Guam (other than a tort claimant with an unadjudicated claim) who is not paid within thirty (30) days of filing his claim may request that the Director of Administration issue a registered, nontransferable promissory note in the amount of his claim from the government of Guam, bearing interest at six percent (6%) per annum and maturing one year from its date of issue. This is another empty remedy, with plenty of limitations and little practical utility. Promise them anything, but give them a page.
2.
D.
Government Claims Act. Once a contract is fully performed, if the government fails to pay as promised, the appropriate avenue for direct payment on the contract is by first making a claim under the Government Claims Act, not the contract dispute mechanism. 5 GCA 6105(a): if the contract has been substantially completed,
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expectation damages may be awarded.) However, if payment is disputed based on disagreement over contract provisions (such as change orders, liquidated damages and the like), the contract dispute must first be determined under the Procurement Act provisions in 5 GCA 5427. (See, Pacific Rock II, supra.) 1. The claim, if made for payment, must first be made to the Claims Officer of the agency involved, must exceed $1,000 and be made within 18 months from the date the claim arose. See the brief discussion below at Article XXIII.F regarding court review of contract disputes for monetary damages, and the Claims Act.
2.
XXII.
Public enforcement of certain procurement matters A. As a general rule, notions of standing do not allow persons too remotely connected with the subject matter of a legal action to bring or participate in an action. As discussed above, the requirement that a procurement protest be initiated by an aggrieved person is reflective of the standing doctrine. However, by law, certain actions may be brought by persons usually thought of as too remotely connected to have standing. Of course, if such remote persons have such rights, then so too would persons who have standing without the aid of such laws. Guam taxpayers have standing to bring suit against improper spending. 1. Any taxpayer who is a resident of Guam shall have standing to sue the government of Guam and any officer, agent, contractor, or employee of the Executive Branch of the government of Guam for the purpose of enjoining any officer, agent, contractor, or employee of the Executive Branch of the government of Guam from expending money without proper appropriation, without proper authority, illegally, or contrary to law, and to obtain a personal judgment in the courts of Guam against such officers, agents, contractors, or employees of the government of Guam and in favor of the Government of Guam for the return to the Government of Guam of any money which has been expended without proper appropriation, without proper authority, illegally, or contrary to law. (5 GCA 7103.) The Attorney General shall take all steps necessary to collect any judgment obtained under this Chapter. If no collection on such judgment is made by the Attorney General within six months of the date of the judgment, then the taxpayer and resident who originally obtained the judgment shall have standing to pursue execution and collection on the judgment on behalf of the government of Guam, under the supervision of the Superior Court. (5 GCA 7109.) The court shall award reasonable costs and attorneys fees in favor of the
B.
2.
3.
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taxpayer and resident who brings suit under this Chapter, against any defendants found liable under this Chapter. (5 GCA 7112.) a. Following the decision in GTA Telecom vs GSA, supra, which was a case brought to enjoin the performance of a contract, wherein the Guam Superior Court ruled that the award would be ratified and affirmed notwithstanding a finding of clear error by the government in the procurement process, the plaintiff sought attorney fees under the theory of 7103. The Judge characterized the claim as tantalizing (Decision and Order re Fees and Costs, SP 50-10, August 3, 2010, at p 2), but determined, because no injunction had been granted, the plaintiff was not entitled to attorney fees.
4.
The Senators and the Guam Legislature shall have standing to sue under this Chapter. The Legislative Counsel, or Assistant Legislative Counsel, may, as a part of his or her duties for the Guam Legislature, represent members of the Guam Legislature or the Guam Legislature, or both, in bringing suit under this Chapter, provided that in such cases, attorney fees will not be allowed. (5 GCA 7115.) It should be pointed out that ,when a contract, entered into in violation of law, is nevertheless ratified under 5 GCA 5452(a)((2)(ii) (discussed above in Article XIX.C.2), 7103 provides what ought to be a fairly simple vindication for the unrequited protestor/appellant left without a contract remedy. Since it is a condition of ratification that there is, first, a determination of violation of law, the only remaining step would seem to be to bring the action; collateral estoppel should be applied to prove the illegally, or contrary to law element of the action.
5.
C.
The public can petition to suspend or disbar a contractor. 1. 5 GCA 5426 provides a mechanism that allows the government to disbar or suspend a contractor for certain causes, including a. conviction of theft or bribery, falsification of records, receiving stolen property or any other offense indicating a lack of business integrity or business honesty which currently, seriously and directly affects responsibility as a territorial contractor. violation of contract provisions which is regarded to be so serious as to justify debarment action for (1) deliberate failure without good cause to perform in accordance with the specifications or within the time limit provided in the contract; or a recent record of failure to perform or of unsatisfactory
b.
(2)
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performance provided that the failure is not caused by acts beyond control of the contractor. c. d. 2. violations of ethical standards (see Article II.I.5). filing a frivolous or fraudulent petition, protest or appeal.
Under subsection 5 GCA 5426(f), any member of the public may petition [the government] to take action to action to debar or suspend a contractor. An investigation of each petition shall be conducted promptly and a written report should be made of findings of fact and action taken.
D.
Public right to obtain procurement data 1. 5 GCA 5485 gives any member of the public the right (by conferring jurisdiction) to bring a Superior Court action to obtain procurement data improperly withheld from the complainant. Recall that most procurement data is designated as a public record (see, e.g., 5 GCA 5251). If the person bringing the action substantially prevails, litigation costs including attorney fees may be awarded against the government. Moreover, if the withholding has been found to be arbitrary or capricious, the Civil Service Commission must initiate disciplinary proceeds. Finally, if there is noncompliance with any order of the Court to release the information, the Court may punish the responsible employees or officers with contempt. a. In Guam Community Improvement Foundation, Inc., vs OPA, Guam Superior Court SP 0247-09, the Court noted that 5485 does not specify the form of the action authorized. That case involved a Writ of Mandate brought to divulge information sealed by the OPA in a protest action stemming from an RFP. The Court liberally construed the pleadings, as well as the posture of the case as regards the actual time allowed to the parties to respond, to allow the Writ to be treated as the civil complaint required to invoke 5485. The Court held, the petition needed only to set forth a complaint claiming that a governmental body is unlawfully withholding procurement data in order for the Court to review the allegations. (At p 17.) (1) Note that 5485 does not specify the exact form of the civil action, but, in the case of an action to review a protest decision under 5 GCA 5480, 5480(f) specifically requires the action to be brought as a civil action as conducted under the Government Claims Act. Thus, in this case, the Court strictly construed the form of action required to bring such a review, while at the same time and in the same Writ, liberally construed the form of action required to seek disclosure of procurement data.
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(2)
Note also that the time limitations specified for bringing 5480 actions is tolled during the pendency of any proceeding brought pursuant to 5485". (5 GCA 5481(d); see, also, GCIF vs OPA, supra, at ftnt 2.)
XXIII. The Courts A. This Primer will not venture into the bailiwick of the courts, except superficially and only insofar as matters of procurement are concerned. But, as has already been noted, particularly for the Aggrieved Person, there are many advantages to be had to taking an Appeal, first, to the Public Auditor rather than the courts. The case for a less deferential standard of Court review of certain procurement determinations under Guam law. 1. As discussed above in Article XVIII.E.4, comparing the OPA standard of review to the courts standard of review, the courts have historically taken a deferential approach in reviewing administrative actions, both generally as well as in the context of procurement actions. a. In Sule v. Guam Board of Dental Examiners, supra, the Guam Supreme Court held that the substantial evidence test as put forth by Guam law is the proper test when the lower court reviews the actions of an administrative board. The Court also noted that, due to a different Legislative enactment, California courts followed less deferential standards than Guams substantial evidence standard, but even there the standard was more deferential than the de novo standard. (See, Sule, 10.) Note that the Guam statute relied upon for the substantial evidence standard (5 GCA 9239) is based in the original Government Code of Guam enacted in 1952 (GC 24139). In applying the substantial evidence standard in the Sule case, the Court said, [t]he job of this court is not to weigh the evidence anew and make its own determinations of credibility and reach its own conclusions, but to look at the evidence and determine whether reasonable minds would accept this evidence as adequate to support the conclusion .... ( 44.)
B.
b.
c.
2.
The traditional deferential standard is usually said to be applicable to all administrative determinations across the board; thus, by that general rule, any agency administrative determination must be deferred to unless it is
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clearly erroneous, arbitrary, capricious or contrary to law. a. Although the Supreme Court of Guam identifies the test as substantial evidence, and the clearly erroneous language is used in the statute discussed below ( 5245), the author is of the view that the clearly erroneous standard is not functionally different from the substantial evidence standard. (1) In the Sule decision, the Court said it would not weigh the evidence but simply determine if reasonable minds would accept the evidence offered. This is also what courts do under the clearly erroneous standard. In either case, the reviewing court gives a great deal of uncritical deference to the administrative determinations, if supported by substantial evidence, having regard to the entirety of the evidence. See, e.g., the California Supreme Court: [W]e will not set aside the court's determination if it is supported by substantial evidence and hence is not clearly erroneous. (People v. Cooper, 809 P. 2d 865 (Cal. Supreme Court 1991).) See, also, the US Supreme Court: Although the meaning of the phrase "clearly erroneous" is not immediately apparent, certain general principles governing the exercise of the appellate court's power to overturn findings of a district court may be derived from our cases. The foremost of these principles, as the Fourth Circuit itself recognized, is that "[a] finding is `clearly erroneous' when although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed." (Anderson v. Bessemer City, 470 US 564 - Supreme Court 1985; emphasis added.)
(2)
(3)
3.
The author believes there is Guam statutory law which would suggest that courts are not bound to the traditional deferential standard of review in certain specific procurement cases or issues; indeed, in such instances they are required to use a less deferential standard, though exactly what that standard is, between de novo and deferential, is uncertain. At the very least, the author posits, it requires a critical look and throwing off the historical reticence to require an agency to substantiate its determinations in a considered and documented process in the manner the Model Regulations describe (see, Article II.O.2.b above). In the procurement context, the Procurement Act has expressly limited the application of the deferential standard of review. 5 GCA 5245 (which post-dates 5 GCA 9239 upon which the substantial evidence standard is
4.
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based) has precisely identified those very few and specific instances where that standard is to be applied, with the clear implication that the standard does not apply in any other instances. The result of 5245 is that many determinations required by the procurement law and regulations are intended to be more closely scrutinized than would be the case under traditional deferential review standards. a. 5 GCA 5245 says, The determinations required by 5211(f), 5212(a), 5212(g), 5214, 5215, 5216(e), 5230(a), 5232(c), 5235, 5236 and 5237(b) of this Chapter are final and conclusive unless they are clearly erroneous, arbitrary, capricious or contrary to law. b. 5245 derives from the very beginning of the Procurement Act in PL 16-124, codified then as GC 6964, and taken from 3-701 of the Model Procurement Code. It post-dates, thereby modifying the effect of, 5 GCA 9239 upon which the Sule substantial evidence rule is based. The specific determinations referred to in 5245 are: (1) (2) (3) (4) (5) (6) 5211(f): decision to permit a correction or withdrawal of a bid. 5212(a): decision regarding requirement for bid security 5212(g): regarding no requirement for performance bond 5214: determination of only one source for use of sole source method of source selection 5215: determination of emergency method of source selection 5216(e): determination of fair and reasonable compensation and best qualified in RFP method of source selection 5230(a): determination of nonresponsibility 5232(c): determination not to require cost or pricing data 5235: determination of contract type 5236: determination of adequacy of contractors accounting system 5237(b): determination to use multi-year contract
c.
(7) (8) (9) (10) (11) d.
The specificity with which the deferential standard of review is to be applied evinces an intent that it not be applied in any other circumstance. Such other instances not specified in 5245 include, (1) 5123(d): determination of end of useful life to dispose of vehicles
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(2)
(3)
(4) (5) (6) (7)
(8) (9) (10)
5211(e): determination that failure to provide security is non-substantial non-compliance, and 5303(c) to same effect 5216(d): determination of initial qualification in RFP process compare to #6 above regarding determination of fair and reasonable compensation and best qualified. 5219(d): determination of utility to government of an unsolicited offer 5306(d): determination to vary approved clause in construction contract 5268(b): determination that proprietary features are essential to territory needs 5426(b)(5): determination of any other cause ... so serious and compelling as to affect responsibility as a territorial contractor 5452(a)(1)(i): determination that it is in the best interests of the territory to ratify contract that violates law 5375: determination to modify reimbursable cost principles 5428(g): determination that the award of the contract without delay is necessary to protect substantial interests of the Territory
e.
It can also be noted that the regulations demand many more determinations required to carry into effect other sections of the Procurement Act not specified in 5245. If the legislative basis for the regulation is a code section other than specified in 5245, the author suggests those determination should, likewise, attract higher scrutiny than traditionally given under the deferential clearly erroneous standard.
5.
The limitations on the use of the deferential standard of review of procurement determinations to the specific instances specified in 5 GCA 5245, is expressly made applicable to the courts by 5 GCA 5480(d), thus overriding the generally applicable deferential review of administrative decisions: Limited Finality for Administrative Determinations. In any judicial action under this Section, factual or legal determinations by employees, agents or other persons appointed by the Territory shall have no finality and shall not be conclusive, notwithstanding any contract provision, or regulation, except to the extent provided in 5245, 5705 and 5706 of this Chapter. (5 GCA 5480(d).) a. 5480(d) was also enacted as part of PL 16-124, then codified as
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GC 6978(d), so also alters the effect of previously enacted 5 GCA 9239 upon which the Sule substantial evidence rule is based, at least as applied to procurement actions. It was thereafter amended by PL 18-44, but only by adding the exceptions for 5705 (review of debarment proceedings) and 5706 (review of breach of contract controversies). b. It could again be mentioned here that 5 GCA 5245 does not apply to the OPA de novo standard of review under 5 GCA 5703, which expressly gives the Public Auditor unqualified power to review and determine de novo any matter properly submitted. 5703 was enacted after, and thus modifies the otherwise general application of, 5245. It must be acknowledged that there is some very confusing language in the Comment to 5 GCA 5480, which derives from the original enactment of GC 6978 in PL 16-124. (1) The Comment states, [a] final change from the MPC is to delete references to notwithstanding provisions of other laws relative to finality of decisions. The MPC provision referenced is MPC 9-401. In fact, the body of both the MPC section and the enacted Guam section actually continues to contain the identical notwithstanding language, with the only difference being the specific references to two additional provisions other than (now) 5245. Moreover, where the Guam law did not originally provide all of the references from the MPC in PL 16-124, it added most of them back in the PL 18-44 amendment. The author concludes that the Comment does not take away anything from the argument made above regarding the limited application of the deferential standard of review.
c.
(2)
(3)
6.
To conclude, a. 5 GCA 5480(d) says administrative procurement determinations are not final or conclusive upon review by the courts, except to the extent provided in 5 GCA 5245. (1) 5480(d) does not adopt nor preclude application of the deferential review standard; it is entirely silent on the subject. It is a general rule saying all administrative decisions are reviewable (that is, they are neither final nor conclusive), but it does not specify a standard of review; indeed, it is entirely silent on the subject of standard of
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review. b. 5245, on the other hand, says certain specific determinations are final and conclusive but only in the context of those particular code provisions, and then only if any such particular determination fails the deferential standard of review, namely the determination was clearly erroneous, arbitrary, capricious or contrary to law. Thus, 5245 expressly speaks to the applicable judicial standard of review for procurement issues. (1) By saying 5245 determinations are final and conclusive unless clearly erroneous, isnt this implying that non-5245 determinations are not final and conclusive? And if not, is there any standard of review applicable (it doesnt say so), or does this also imply a de novo review? 5245 is an express exception to the general rule of 5480(d) and expressly adopts the deferential standard of review, but only in limited circumstances. The invocation of the deferential review standard to only particular procurement determinations is strong indication of legislative intent that the standard is not applicable to other procurement determinations.
(2)
c.
By choosing to expressly adopt that the deferential standard only in select procurement circumstances, the legislature has implied a rejection of the substantial evidence/clearly erroneous deferential standard in all other procurement determination reviews. The legislature did not define that standard of review for such other non-specified circumstances, but 5480(d) makes it clear that such decisions are reviewable and 5245 strongly implies the standard of review is not intended to be as hands-off as the deferential substantial evidence/clearly erroneous standard. (1) It would seem that the appropriate standard should be a standard of critical review falling somewhere in between the de novo fresh look standard and the deferential blind eye standard. Such a standard should shift the burden of proof and require the agency to substantiate its action according to the purposes (this Chapter shall be construed and applied to promote its underlying purposes and policies; 5001(a))) and processes (e.g., written determinations required by this Chapter shall be retained in the appropriate file; 5020) required by the procurement laws.
d.
(2)
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(3)
Indeed, if the substantial evidence test is to be the norm for judicial review of administrative determinations, as enunciated in Sule, supra, then in all cases of procurement determinations, other than those specific determinations specified in 5245, the standard ought to require a more critical review than substantial evidence or clearly erroneous allows. Maybe this does not require a de novo review, but neither is there anything in the statute which suggests any standard other than that.
7.
The author would argue that the standard of review for procurement determinations made in the context of solicitations or awards ought to be de novo, and that it is a per se violation of the deferential arbitrary and capricious standard of review for an agency to fail to have and maintain a written determination when required by law. a. The Public Auditor is given a de novo standard of review (5 GCA 5704), consistent with her obligation to utilize her jurisdiction to promote the integrity of the procurement process and the purposes of the Procurement Act (5 GCA 5703). The courts, given the jurisdiction to determine whether a solicitation or award of a contract is in accordance with the statutes, regulations, and the terms of the solicitation (5 GCA 5480(a)), have no less an obligation. (1) This Chapter shall be construed and applied to promote its underlying purposes and policies. (5 GCA 5001(a).)
b.
c.
It would be wholly consistent with the Procurement Act to conclude that the courts ought also to have a de novo right of review of administrative procurement determinations, except for those specific determinations specified in 5245. The author would further argue that any determination made which is required by the Procurement Act or regulations to be kept in a written determination as part of the procurement record would be a per se violation of the arbitrary and capricious standard, regardless of any less deferential standard that might be applicable. (1) 5 GCA 5020 requires that written determinations be retained as part of the procurement file. This statute is verbatim the same as MPC 1-201. The Policy Office was charged with the duty to adopt the Model Regulation implementing this Model Code provision, since Guam law made no change to it. (See introductory Official Comment to
d.
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the Procurement Act.) It was the intent of the Legislature in adopting PL 16-124 that the Model Regulations be incorporated so long as the Guam version of the Model Code was not changed from the Code version, as is the this case with 5020. (2) The Model Regulations ( R1-201.01.2) implementing the Model equivalent of 5020 require that [e]ach written determination shall set out sufficient facts, circumstances and reasoning as will substantiate the specific determination which is made. The Guam Supreme Court has held, in an arguably analogous case involving Civil Service decision making discretion discussed supra, that an administrative judgment made without articulating in its decision a reasoned basis for doing so ... is inherently arbitrary and capricious. (In re Department of Agriculture v. CSC (Rojas), 2009 Guam 19, 31.) Thus, when a written determination is required under the Procurement Act, including those determinations specified in 5 GCA 5245, and it is either not made or kept nor complete by failing to set out sufficient facts, circumstances and reasoning as will substantiate the specific determination, the decision is inherently arbitrary and capricious.
(3)
(4)
C.
Court review of bid protests: 5 GCA 5425(e) indicates protest decisions may be taken to the Public Auditor, and 5 GCA 5480(a) states the Superior Court shall have jurisdiction over an action between the Territory and a bidder, offeror, or contractor, either actual or prospective, to determine whether a solicitation or award of a contract is in accordance [with the laws and regulations]. This would seem, at first blush, to make it optional whether to appeal a protest decision to either the OPA or the Superior Court. However, note the following: 1. 5 GCA 5481(a) restricts the filing of any 5480(a) court action within 14 days after receipt of a final administrative decision. (This 14 day limit applies to a review of an agency protest decision; as discussed above in Article XVI.G.7.a on Procurement Protests, there is a 30 day filing period for bringing protest actions directly to the court provided by 2 GAR 9109(1)(a).) In contrast, 5 GCA 5425(e) allows protest appeals to OPA within 15 days after receipt of the notice of decision, referring to the agencys notice of decision required after protest in 5425(d). 5 GCA 5425(f) says an OPA decision is final unless appealed to the Superior Court under 5480. The general notion of exhaustion of administrative remedies (see Article
2.
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XXIII.D.5), suggests that no court action should be commenced unless a protest has been first administratively determined to finality by the OPA. However, the express possibility of initiating a protest action in the Superior Court under the 30 day filing limit provided in 2 GAR 9109(1)(a) does distract from this suggestion. 3. In In the Appeal of O&M Energy, S.A. [#2], OPA-PA-09-008, the Government Agency has, during the pendency of the OPA appeal, brought a very curious court action, Guam Power Authority v. O&M Energy, S.A., Guam Superior Court, CV 1896-09, styled simply as a verified complaint, citing the jurisdiction of 5 GCA 5480(a). (See copy attached to Notice of Filing Superior Court Case in the OPA action.) The intent is to simply oust the OPA of its jurisdiction in the matter (dismiss the OPA appeal), based on the argument that the Appellants case does not adequately state grounds for protest. This is a curious move for several reasons, among them: a. Foremost, this would work a complete injustice on the procurement appeals process. Persons who may be aggrieved are given due process rights to protest, and then appeal a denial of the protest to the OPA. (5 GCA 5425(a) and (e)). The agency denied the protest on the same grounds it seeks to avoid OPA review of the protest. However valid the agencys claims may be, the law allows those claims to be tested by administrative review, and this action seeks to negate that. Whatever jurisdiction the Superior Court may have to hear such a matter, it would seem that the doctrine of exhaustion of administrative remedies (see Article XXIII.D.5) would compel the court to remand the matter to OPA to complete its review. As noted, the agencys claims to the Superior Court are essentially nothing more than a rehash of its denial of protest in the first instance. OPA has not heard nor rendered its decision in the matter at the time the action has been commenced. In essence, then, this case is an appeal to the Superior Court by the agency from its own protest decision, which rather turns things on their head; if the agency was not injured by its protest decision, what possible injury is being appealed? The complaint acknowledges that its protest decision was rendered on October 7th. The OPA, as noted, has not rendered a decision. The agency commenced the court action December 31st. The action appears to be procedurally defective because it is either too late or too early. It is too late to bring an action on the protest, since 5 GCA 5481(a) requires it to be initiated withing 14 days after receipt of final administrative decision. It is too early to bring an action on the appeal, since 5 GCA 5425(f) requires a final decision by the Public Auditor before initiating a 5480(a) action.
b.
c.
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D.
Court review of OPA bid dispute decisions. 5 GCA 5707 authorizes an appeal of an OPA decision to the Superior Court, of the subject matter and in the manner described in 5 GCA 5480 and 5481. 1. The right, as described in 5707(a), is to appeal from a decision of the Public Auditor, and is available to any person receiving an adverse decision. This is reiterated by 5 GCA 5425(f), which says [a] decision of the Public Auditor is final unless a person adversely affected by the decision commences an action in the Superior Court in accordance with Subsection (a) of 5480 of this Chapter. The subject matter, described in 5480(a), is restricted to a determination whether a solicitation or award of a contract is in accordance with the statutes, regulations, and the terms and conditions of the solicitation. Confusion has existed as to the form of action of the judicial review. a. The first OPA Decision finally reviewed and determined by the Superior Court (that is, on an appeal from a Public Auditor Decision, as opposed to an appeal to the court from a Protest decision) was taken not by way of appeal of the OPA decision under the appeal authorized by 5 GCA 5707(a) of the Procurement Act, but by way of Petition for writ of mandate as contemplated by the Administrative Adjudication Law, 9 GCA 9241. See, TRC Environmental Corporation SP 160-07, at page 4. Two other appeals were thereafter taken, as noted in the Public Auditors 2008 Public Report, page 14 (http://www.guamopa.org/docs/2008AnnualReport.pdf ). One of those matters, In the Appeal of Town House Department Stores, Inc., dba Island Business Systems & Supplies, by Xerox Corporation, Appellant, SP 240-08 (arising from the OPA Decision in In the Appeal of [IBSS vs GPSS(2)] ), was commenced by action denominated Complaint and Appeal of Decision by the Office of the Public Auditor..., invoking the jurisdiction of 5 GCA 5707. The GCIF vs OPA Superior Court matter, supra, was brought to review the OPA Decision in OPA-PA-09-005 by way of writ of mandate (as in the TRC case, above). (1) The Superior Court action was brought for two causes: one to test the validity of a decision of the Public Auditor naming a competing offeror as the best offeror under an RFP; the other to challenge the Public auditors decision to withhold (keep confidential) certain information of a competitors offer pending award of the contract. Both causes were brought
2.
3.
b.
c.
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within the context of the one Writ of Mandate. (2) The Superior Court agreed that there could be confusion as to the specific method of obtaining judicial review of a decision of the Public Auditor in a dispute concerning the solicitation (Decision and Order, April 13, 2010, p 9), but, after lengthy analysis concluded such an action was required to be brought as a civil action under 5 GCA 5480. The judge (Hon. Arthur R. Barcinas) dismissed the writ of mandate as being the wrong form of relief to test the validity of the decision choosing the best offeror. (a) Judge Barcinas made the specific holding that [t]he relief afforded under 5 GCA 5480 is in the form of a civil action for ordinary relief, rather than a special proceeding affording extraordinary relief, as provided through mandamus. (At p 8.) Judge Barcinas held that, notwithstanding the references to the Claims Act procedures in 5480(f), the appropriate way to proceed with the civil action would be by properly filing a civil action which follows the notice requirements and procedural posture of a government claim... after an unsuccessful appeal to the Public Auditor (p 12). The judge specifically stated the time limit for bringing the court action is the 14 day period from receipt of a final administrative decision specified in the Procurement Law at 5 GCA 5481(a). (At p 11.) Judge Barcinas also explored the application of Administrative Adjudication Law, particularly 5 GCA 9241, to actions brought to review other OPA decisions made in the course of a procurement appeal. This was, at a glance, confusing. The Judge carefully parsed the application of the procurement adjudicatory review provisions and the Adjudicative Act procedural review provisions, concluding, Guams Procurement Law provides a specific method for obtaining judicial review of a procurement protest ... and a separate method for obtaining judicial review of a governmental bodys decision to withhold the contents of procurement data. (At pp 5-6.) On the other issue, the procedural issue regarding
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(b)
(c)
(d)
withholding of information pending award, note that the statute upon which withholding data is based, 5 GCA 5485, says, on complaint of a member of the public, the Superior Court has jurisdiction to enjoin the government from withholding procurement data. The only procedural aspect of the provision is that normally such a complaint is to be expedited and take precedence over other court proceedings, in the manner of other special proceedings. i) Although brought as a writ action, Judge Barcinas treated the matter as a complaint and allowed it to be considered. He said, [n]o particular form of complaint is required under the statute to grant the Superior Court the ability to review the decision of a governmental body to withhold procurement data. (At p 15.) He added, [t]he purpose of the statue is clear. It exists to allow the court to hear matters on the merits even if a formal method of procedure is not delineated within a statute or statutory scheme conferring jurisdiction. (At p 16.) He then concluded, [d]espite the petitions caption [as a Writ of Mandate], it is apparent that the intent of the petition was to seek review [of] the actions of the Public Auditor ... [and] having determined that the particular statute governing judicial review in this case does not specify the form or content of the complaint, and 7 GCA 7117 dictates that when the course of the proceeding is not specifically pointed out by law or rules of procedure the Court may adopt any reasonable mode of proceeding, the Court finds that the petition was not required to be framed in any particular manner at the time it was initially filed. (At pp 16-17.)
ii)
iii)
iv)
d.
Reaching a different result on the form of action from bringing a review of the Public Auditors adjudicatory decision, within weeks of Judge Barcinas GCIF decision, supra, was the Superior Court case
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In the Matter of L.P. Ganacias Enterprises, Inc., dba Radiocom, SP 0049-07. (1) This action was brought as a Procurement Appeal Pursuant to 5 GCA 5480", assigned as a special proceeding, to review the Public Auditors Decision in OPA-PA-06-003 which found a solicitation to be an illegal sole source method of procurement, and terminated the contract. In this case, Hon. Michael J. Bordallo, ruled that the appeal of the Public Auditors decision on the merits was the wrong form of action. Judge Bordallo took his cues from the Administrative Adjudication Act, 5 GCA 9241 in particular, and ruled the appeal of the decision should be by way of Writ of Mandate. Judge Bordallo did not discuss the distinctions between a decision on the merits and a decision on a matter of administrative procedure. In in Carlson v. Perez, 2007 Guam 6, a case Judge Barcinas cited and discussed, the Guam Supreme Court determined that the Administrative Adjudication Act was not the source for determining the form of all agency reviews. The Supreme Court held, where an agencys laws and regulations provide for specific procedures for judicial review, that law prevails. (See discussion beginning at 57, supra.)
(2)
(3)
e.
To repeat, in the results of the two close-in-time cases discussed above, one appeal (GCIF), brought as a writ, was dismissed because it should have been brought as a civil appeal action, and the other (RadioCom), brought as an appeal, was dismissed because it should have been brought as a writ. Judge Barcinas has very helpfully provided a more thorough discussion of the form of action question in a subsequent case, Harbor Centre Guam Co, Ltd vs. Doris Flores Brooks, Public Auditor, SP 0226-10 (Decision and Order, November 22, 2010). (1) In the Harbor Centre case, Judge Barcinas noted that much of the confusion stems from Guams election to maintain the strict form of Writ of Mandamus (which, in the words of one courts quotation selected by Judge Barcinas, is described as some of the old procedural booby traps which common-law pleaders could set to prevent unsophisticated litigants from ever having their day in court) rather than follow the Federal rule which abolished strict writ pleading. (See, Discussion #1, pp 1-5.)
f.
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(2)
Judge Barcinas also laid blame on the failure of litigants to distinguish between the Public Auditors decisions on procedural matters from decisions on substantive merits. (Discussion numbers 2 and 3.) Judge Barcinas finally held that an Alternative Writ of Mandamus must issue pursuant to 5 GCA 9241, saying [b]ecause there are no specific statutory provisions mandating a particular form of judicial review applicable to procedural decision of the Public Auditor, the [procedural] issue presented in this case is properly addressed by the Superior Court through a writ of mandate.... (At p. 10.) Summing up, the Court ruled, 5 GCA 5480(a) is not applicable to the facts of this case, because the decision underlying this particular petition, rendered by the Respondent OPA, does not concern itself with the legality of a solicitation or award of a contract ... and the terms and conditions of the solicitation. 5 GCA 5480(a)(2005). Rather, the underlying decision which the Petitioner seeks to have reviewed by this Court concerns the Public Auditors compliance with the Rules of Procedure applicable to procurement appeals. The Court finds that there is a separate method for obtaining judicial review of the Public Auditors decision regarding its own procedural rules, and that the very specific procedures of 5 GCA 5480(a) do not give this court jurisdiction over the question of whether an adjudicative officer, such as the Public Auditor, has correctly interpreted its own rules. This procedure is properly provided through a petition for a writ of mandamus pursuant to 5 GCA 9240 and 9241.
(3)
(4)
4.
Standing: The standing question was another interesting side issue in the RadioCom Superior Court case, supra, one which does not sit well with the author, with all due respect. Bear in mind that the appellant, S.E.S., had been awarded the contract and given purchase orders, but the Public Auditor had determined the award was improperly sole sourced. a. Guam procurement law allows a protest to be brought by an aggrieved person, and in resolving the protest, there is no requirement to involve any other person or party; it is done by mutual agreement between the aggrieved person and the agency. Then, on appeal by an aggrieved party to OPA, an interested party may intervene, but is not required to be made a party by the aggrieved party or OPA. Intervention by an interested party in the protest and the OPA appeal is entirely discretionary. These matters
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are discussed above. b. Then, on appeal to OPA, any other interested party must, by regulation, be notified of the appeal by the agency, but there is no requirement for the appellant or anyone else to provide documents, and there is no requirement for the interested party to appear; there is no provision in law or regulation for warning an interested party who is give notice of the appeal that failure to appear is prejudicial. 5 GCA 5480(a) in the Chapter cited, bestows jurisdiction on the Superior Court over an action between the Territory and a ... contractor, either actual or prospective.... S.E.S. was admittedly adversely affected by the OPA Decision. As Judge Bordallos July 13, 2010 Decision and Order stated, the Court agrees that S.E.S. has suffered an adverse decision. He also acknowledged that 5 GCA 5707(a) provides jurisdiction for any person receiving an adverse decision to appeal from a decision of the Public Auditor to the Superior Court of Guam as provided in Article D of Chapter 9 of this Chapter. (At p 3.) But as discussed below, the Judge held S.E.S. lacked standing due to provisions of the Administrative Adjudication Act. As will be seen, the author is not convinced that reference to the AAA is well placed; rather, a contrary conclusion is compelled by the Procurement Act. (1) There was a Decision and Order rendered in a previous issue in this same case, January 23, 2008, involving the question whether RadioCom would be allowed to intervene in the court action although unnamed as a party. Judge Bordallo ruled that RadioCom could not intervene because it had not made a requisite showing of substantial interest under Guam Rules of Civil Procedure, Rule 24. He subsequently reversed that decision. But what was significant for this discussion is that the Judge said, but for the substantial interest matter, RadioCom is not precluded from intervening in the matter ... upon establishing the requirements of 5 G.C.A. 5480 and 5707. (D&O January 23, 2008, p 4.) He said nothing whatsoever about lacking standing under 5 GCA 9104 and 9240, which is the legislative basis on which he denied S.E.S.s standing. If is was sufficient for RadioCom to participate in the action on the basis of the 5707 appeal, why not S.E.S.?
c.
d.
(2)
e.
Nonetheless, disregarding the right of appeal and jurisdiction

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bestowed by the Procurement Law, and the fact that the Procurement Law and Regulations do not require the attendance of anyone other than the agency and the protestor at the protest level or the OPA appeal level, Judge Bordallo looked to the Administrative Adjudication Act to conclude, that a party as defined in the Administrative Adjudication Act (5 GCA 9101 and 9240) controlled standing issues, not the person mentioned in 5707 nor the contractor specified in 5480(a) of the Procurement Act. (1) Disregarding the Procurement Law which would not require S.E.S. appearance in the protest or OPA appeal, he held, in order to be a party, the person or agency must have appeared in the proceedings. Because S.E.S. did not appear before the proceedings, it is not a party and therefore, it lacks standing. (At p 3.)
f.
It is important to appreciate that the AAA anticipates that there are only two sides of interests to the dispute, as inferred from the definition of party. (See 5 GCA 9104.) On the one hand there is the agency, and the person against whom an accusation is filed, and on the other there is the party initiating the accusation (5 GCA 9202). These two sides are referred to as any party and the opposing party in 5 GCA 9227. A contested dispute subject to the AAA contemplates that a hearing will be had. (See, 9 GCA 9201, 9202). No other person has the right to appear, and may only appear as allowed ( 9104). In a procurement protest dispute, however, there are multiple parties who may have a direct interest in the outcome of the dispute, including the agency, the protestor, contractors and other bidders. The persons other than the agency and the protestor have the right to appear in the protest and the administrative appeal to OPA, but their presence is not required to determine either the protest or the appeal. (See, 5 GCA 5425(b) and (c) and 2 GAR 9101(a)(1)(a), which defines an interested party as only one who has filed a protest; as well, note that only the protestor (not any other bidder or contractor) has the right to administrative appeal of a protest decision under 5 GCA 5425(e), and on such appeal other interested parties may appear and be heard (2 GAR 12104(c)(4)), but are not required nor essential for a decision (2 GAR 12104(c)(5)). There is no hearing in an administrative appeal to OPA in a procurement protest or contract dispute unless the parties affirmatively and timely request it. (2 GAR 12108(a).) The author believes that the Procurement Law takes precedence, in cases of inconsistency, over the Administrative Adjudication Act.
g.
h.
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The AAA is an act of general application to all agencies and agency decisions. It was adopted in 1977 and re-enacted in the 17th Guam Legislature. The Procurement Act is a limited act, applying only to procurement actions and decisions of agencies. It was adopted in the 16th Legislature in 1983 and substantially amended, including amendments affecting forms of relief allowed, by the 18th Legislature in 1986. An act that deals more specifically with a subject generally has precedence over an act of more general scope, and legislation later enacted generally has precedence over earlier enactments. i. In analyzing the interplay between the Procurement Act and the Administrative Adjudication Act, and in support of the argument above that the Procurement Act should take precedence, our analysis should be informed by the observations of the Guam Supreme Courts analysis of the similar interplay between the Claims Act and the Procurement Act. (1) In the Pacific Rock I case, discussed above, the Supreme Court framed the issue: Although the contract at issue was made pursuant to authority granted DOE under the Procurement Law, the parties allege that jurisdiction over this action is properly found under the Government Claims Act. ( 13.) It noted: Litigants have used the Government Claims Act to plead jurisdiction and the defense of lack of jurisdiction for all contract and tort actions against the government. ( 15.) The facts of the dispute, however, arose and were adjudicated almost entirely under the Procurement Law. ( 20-23.) The Supreme Court held: the Procurement Law at 5 GCA 5001 et seq. is a comprehensive statute providing a mandatory scheme of administrative remedies including judicial relief. ... [I]t is the statute which, upon compliance with procedure, satisfies the jurisdictional prerequisite to commencing an action against the Government of Guam at the Superior Court. Thus, we hold that a contractor commencing an action in contract for relief from adverse decisions reached under the Procurement Laws legal and contractual remedy provisions need not proceed under the Claims Act.
(2)
(3)
(4)
j.
It would seem entirely analogous to the Procurement Act vs Claims Act analysis to say that a contractor who is adversely affected by a decision of the Public Auditor and commences an action (5 GCA
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5425(f)) in the Superior Court to determine whether a solicitation or award of a contract is in accordance with the statutes and regulations (5 GCA 5480(a)), is a person under the comprehensive scheme of the Procurement Law, which gives such person the right to appeal from a decision by the Public Auditor (5 GCA 5707(a)), rather than a party whose rights are determined under the AAA. It would appear to the author that standing to appeal is legislatively provided to such persons in the procurement context and cannot be abrogated by the technical legal confines of the writ of mandate provided under 5 GCA 9241 of the Administrative Adjudication Act. 5. Failure to appear and exhaustion of remedies: That said, the author suggests that the more critical question is whether any such person is obligated under the doctrine of exhaustion of administrative remedies to intervene in the OPA appeal to preserve the right to appeal. This is a judicial notion, which has not been expressly addressed in any of the cited legislation, and was raised by the intervening real party in interest, RadioCom, in the RadioCom Superior Court case pleadings and papers, but not discussed in the Courts decisions. It then is more of a flexible equitable question in the nature of estoppel than the structured legal notions of standing. a. The author does not presuppose that appearance is necessary to exhaust administrative remedies, only suggesting it as the more appropriate line of analysis to whether standing requires appearance.
6.
Applicability of the doctrine of exhaustion of administrative appeals prior to bringing a court review was discussed by the Guam Supreme Court in Carlson v. Perez, 2007 Guam 6. The Court there described it as a judicial policy of encouraging litigants to exhaust their administrative and legal remedies.... (At 68.) a. The Court elaborated: There are several reasons for the exhaustion of remedies doctrine. The basic purpose, as Judge Unpingco recognized, is to lighten the burden of overworked courts in cases where administrative remedies are available. Morton v. Sup. Ct., 88 Cal. Rptr. 533, 536 (1970). A second justification for upholding the doctrine of exhaustion of administrative remedies is revealed in Westlake Community Hospital v. Superior Court, 551 P.2d 410, 416 (Cal. 1976), where it was recognized that even where the administrative remedy may not provide the specific relief sought by a party or resolve all the issues, exhaustion is preferred because agencies have the specialized personnel, experience and expertise to unearth relevant evidence and provide a record which a court may review. (At 69.)
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E.
Recall also that the Courts standard of review is specified in 5 GCA 5704. Any determination of an issue or a finding of fact by the Public Auditor is final and conclusive on the court unless arbitrary, capricious, fraudulent, clearly erroneous, or contrary to law: i.e., the deferential standard of review. Any decision of the Public Auditor, including any determination regarding the application or interpretation of the procurement law or regulation is entitled to great weight and the benefit of reasonable doubt. Court review of OPA contract dispute decisions 1. Although 5 GCA 5425(f) and 5427(e) give the Public Auditor administrative review authority over both solicitation and award disputes as well as contract disputes, 5 GCA 5480(a) carefully limits waiver of sovereign immunity for court actions to solicitation and award disputes only. Contract disputes are, by their very nature, post-solicitation and award issues. Moreover, contract disputes may only involve questions of performance, but often involve a claim for monetary damages, and the monetary claim implicates the Guam Government Claims Act. If, after a procurement protest and appeal, it is administratively determined that a contractor is owed contract damages, any action taken to collect the damages must go by means of the Claims Act, which means starting first with another administrative review process under that Act. Recall that an appeal to the court from an OPA review of a contract dispute involving a claim for monetary damages must proceed pursuant to the requirements of the Government Claims Act, starting with lodging a claim first with the Attorney General after a final decision by OPA. a. 5 GCA 5480(f) says all actions permitted by 5480(a) shall be conducted as provided in the Government Claims Act. As discussed above, the Guam Supreme Court, in Pacific Rock I and II, reconciled the Procurement Act and the Government Claims Act inconsistencies by holding the Procurement Act applies to all procedures and remedies for all procurement disputes up through administrative review and court review, excepting procurement contract disputes over monetary damages , which must proceed to court, after exhaustion of all administrative reviews of both the Procurement Act and the Claims Act, under the Claims Act procedures. (See, Pacific Rock II, at 21, 33, 34, 36.) To reiterate, this applies only to cases where contract provisions are alleged to be breached resulting in claims for damages. If there is no dispute over the application of contract terms or performance (which might involve court action for declaratory relief or specific performance), and a claim is simply an action to collect amounts owing a contractor under the contract, such action must be taken directly under the Claims Act without recourse to the Procurement
F.
2.
b.
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Act dispute resolution process. The Procurement Act is not intended to be a debt collection mechanism. 3. The distinction between court review of procurement solicitation disputes and procurement contract disputes arises from the notion of sovereign immunity. Government entities cannot be sued for their proprietary actions unless they consent. Bid solicitation and award disputes, as discussed above, may only be taken up for court review because 5 GCA 5480 specifically waives sovereign immunity for such actions. It does not waive sovereign immunity for monetary damages arising from government contracts. Waiver of sovereign immunity for such damages is granted by a separate waiver under 6 GCA 6105(a), and requires proceeding under the Claims Act. 6105(a) is a tautological and categorical waiver of immunity for contract monetary damages, which would include damages claimed for breach as well as simple nonpayment. The rest of the Claims Act deals with the procedure for making claims and enforcing them, including certain other claims (mainly tort claims), which are not topics for this Primer. In a nutshell, the Claims Act seeks to administratively resolve claims without first resort to courts, much the same as the Procurement Act. It thus can be thought of as further administrative procedures which must be exhausted before court action is brought. A review of the Claims Act requirements is not presented here, but for purposes of appealing a Procurement Act contract dispute decision by OPA which entails a monetary claim, note the following: a. First, the formal claim must be filed the with the Claims Officers responsible for the department or agency against which the claim is made under the detailed requirements of the Claims Act, 6 GCA 6201 et seq. The claim must be filed within 18 months from the date the claim arose ( 6106(a)). As the Supreme Court in Pacific Rock II held, contract dispute actions arising from Procurement Act review procedures arise when a final decision in that process is made. Pacific Rock II illustrates that final decision can be confusing to determine under typical agency reviews, but should be obvious when such a review is appealed for OPA review, given OPAs record of coming to final decisions. Pacific Rock II holds that the determination of when a final decision is given is a question of fact that will not be disturbed on review unless clearly erroneous. (At 43.) (1) Although immunity is waived on claims brought in reliance upon a contract to which the Government of Guam is a party, those claims can arise in various types of contractrelated actions. Different actions have different rules relating
4.
5.
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to when the limitation period begins to run; the rule for unwritten contracts is different for written contracts, for instance. Since the claim must be filed within 18 months from the date the claim arose, courts look to when the statute of limitation for the claim begins to run to determine the date when the claim arose. (2) The Guam Supreme Court just recently dealt with this situation, in Guam Police Department vs Superior Court (Lujan), 2011 Guam 8, filed May 10, 2011 (referred to in this Primer as the Big Ben case, based on the business name of the real party in interest). The Big Ben case dealt with a claim for contract and equity claims arising from unwritten agreements for services rendered over a period of time. The Court determined the time when that claim arose was the time in which a similar contract claims statute of limitations began to run. Looking to 7 GCA 12305(8), dealing with actions arising from oral contracts, contracts implied in fact, and quantum meruit claims, the Court determined there are four different factual basis for determining the time the statute would run, but in this case the test would be the date of the last rendered service under the unwritten agreement. Since that date was more than 18 months before the government claim was made, the Court ruled the later action on the claim lacked jurisdiction; indeed, since the government had not waived immunity for any late-filed claim, the claim itself was without right.
b.
If the claim review is rejected, a court action must be brought within 18 months of the rejection. (6 GCA 6106(b).) If the claim is not rejected but simply ignored or dies on the vine, the action must be brought no less than six (6) months after the claim was filed (6 GCA 6208(b)) nor more than 24 months after the claim was filed (6 GCA 6106(b)). (1) There are compelling due process considerations here. Persons who file claims have a reasonable expectation that the government will attend to the claim, affirmatively or negatively. Under Claims Act practice, once a claimant files an effective claim, the claimant is notified simply that the government has 6 months to grant, settle or deny a claim. The Claimant is also told that, if after 6 months the claim is not settled or you have not been notified by our office that your claim was denied, the claimant may be bring action in court. There is no warning that no notice is prejudice. There is no warning that a special limitations period is
c.
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applicable if no acceptance or rejection of the claim is forthcoming. There is no warning that legal action must be brought within 24 months to preserve rights to the claim. (2) It is unfair, given the ambiguous notices given to claimants, to impose a time period to cut off a claim that the government is duty bound to consider by simply doing nothing. This would be especially unfair when a claimant seeks to follow up on the claim and gets the run-around or further procrastination. The Supreme Court, in the Big Ben case (supra, at 15-16), recognized there are exceptional circumstances when the government will be equitably estopped from asserting its sovereign immunity. The application of the theory of equitable estoppel "is wholly independent of the limitations period itself and takes its life ... from the equitable principle that no man [may] profit from his own wrongdoing in a court of justice. (internal citations omitted)." Successfully demonstrating that the theory of equitable estoppel prevents the Government from invoking sovereign immunity requires proof of inducement. ( Big Ben, supra, at 15-16; internal citation and new omitted.)
G.
It must also be remembered, should any part of the Appeal to OPA be taken up in a court action (for instance, an injunction action), the OPA matter will be, at best, put on hold, if not entirely removed to the court, until or unless the court returns the matter to the Public Auditor. 1. If an action concerning the procurement under Appeal has commenced in court, the Public Auditor shall not act on the Appeal except to notify the parties and decline the matter due to Judicial involvement. This section shall not apply where a court requests the decision of the Public Auditor. (2 GAR 12103(b).) Note also that the automatic stay is re-instituted upon an appeal to the court from an OPA decision. This results from the interplay of 5 GCA 5425(f) and (g). Subsection g imposes the automatic stay prior to final resolution of the protest. Subsection f defines that finality to include appeals from decisions of the Public Auditor: A decision of the Public Auditor is final unless court action is taken to appeal it. This condition of finality implies re-imposition of the stay upon filing the court appeal. a. Query how a court would deal with any actions adverse to the appellant taken during the gap between the OPA decision and filing of the appeal?
2.
H.
It must also be remembered that Decisions and Rulings of the courts pre-empt or
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over-rule the Decisions of the Public Auditor, and provide their own unique contributions to the body of Guam Procurement Law. 1. Recall, however, that decisions and determinations of the Public Auditor shall be entitled to great weight and the benefit of reasonable doubt, although it shall not be conclusive on any court having competent jurisdiction. (5 GCA 5704.)
XXIV. A review (with commentary and full disclaimer) of some of the OPA Decisions, or issues in Decisions, not discussed or only touched upon, in the Outline above, and with all due respect to the authors of the findings and decisions and related submissions. This review is entirely the opinion of this author and rendered humbly, warts and all. All Decisions of the Public Auditor are found on the OPA website, as mentioned above. In addition, the Public Auditor has included her own Summary of all OPA appeals through OPA-PA-08-010 in Appendix 5 to her 2008 Annual Report, http://www.guamopa.org/docs/2008AnnualReport.pdf . 1. OPA-PA-06-001, In the Appeal of the Debarment of Rex International, Inc. (vs GWA) a. This case is fascinating as being the first case ever heard by the Public Auditor, but more so because it is the only case to date dealing with the power of an agency (here, GWA) to debar a contractor/bidder and the authority of the Public Auditor to hear the appeal. The Appeal and Agency Report were filed. Unfortunately for students of Guam procurement, the appeal was withdrawn without explanation, and the case dismissed.
b.
2.
OPA-PA-06-002, In the Appeal of Far East Equipment Company, LLC (vs PAG) a. This case involved an apparent multi-step IFB for crane gantry at the Port of Guam. The issues involved the appropriate amount of bidding time for a complex bid, and the alleged failure of the agency to respond timely to questions, and the agencys material changes to the bid, and the agencys failure to communicate answers and changes to all bidders. The Appeal, Agency Report and other matters were filed and a hearing date set before the agency cancelled the bids and the appeal was dismissed.
b.
3.
OPA-PA-06-003, In the Appeal of RadioCom (vs GSA for Office of

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Homeland Security) a. This case went all the way through hearing and Decision, so this is the Public Auditors first Decision. This was an appeal of a sole source procurement (neither IFB nor RFP). The contractor prepared the specifications, and GSA accepted, without question, and incorporated in its own determination, the contractors and OHS assessment that the supplies were incompatible with other equipment, justifying the sole source procurement. The procurement was funded from Federal funds. The Decision held that (1) the Procurement Act controlled notwithstanding the use of Federal funds. the specifications did not include any reference to compatibility, and the compatibility argument was manufactured after the fact to justify sole source. the CPO must monitor specifications and make an independent assessment whether there are other potential contractors, and cannot simply rely on the representations of vendors or the using/purchasing agency, especially when a responsible source has expressed interest in the procurement, the agency must make reasonable efforts to permit the source to compete.
b.
c.
(2)
(3)
4.
OPA-PA-07-002, In the Appeal of Emission Technologies, Inc. (vs GPA) a. Discussion of this OPA Decision must begin with the caveat that it has been vacated by the Guam Superior Court, TRC Environmental Corporation, SP 160-07. Thus, the OPA Decision is purely academic and without legal precedent. This Appeal involved issues of the timeliness of filing an Appeal, and the responsiveness of a bid when the bidder does not hold a Guam business license at the time the bid is submitted, as well as an issue of local preference. The Appeal was brought by a qualified offeror under an RFP who had been determined not to be the most best qualified offeror. (1) The Superior Court vacated the Decision on the grounds of timing, finding the Public Auditor lacked jurisdiction to consider the Appeal to her office because it was untimely filed beyond the 15 day filing period. Along the way, the
b.
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Court disagreed with the OPAs Decision as to the need for an offeror to have business license at the time when an offer is submitted in response to an RFP. c. An issue not argued or considered was that the solicitation was in the form of an RFP, and the services sought were for a continuous emissions monitoring system. As indicated in the outline above, it is questionable whether these services fall within the scope of professional services. But, anyway, that is why the appeal is from a disappointed offeror rather than a higher bidder. The timing issue is complicated by whether communications constituted a request for reconsideration or a second protest. The Decision seemed prepared to accept it was a request for reconsideration and telegraphed the impression it would consider whether that tolled the appeal filing time, but found that the appeal to OPA was timely anyway, so we didnt get a firm decision on the reconsideration tolling question. The Superior Court construed the communications between the protestor, agency and OPA to the effect that the initial protest and reply constituted the full protest and denial, making the formal appeal to the OPA untimely. On the substantive issue of the Guam business license, the Decision held that, because the RFP required a Guam business license to be considered for award, the failure to have it rendered the offerors proposal nonresponsive. The author suggests the J&G Construction case (a matter of first impression) contradicts and overrules this holding because, first, qualification to conduct business is what the Guam business license issue is all about and that is a matter of bidder responsibility, not responsiveness; and, second, the solicitation documents (IFB/RFP) cannot by any mandate convert an issue of responsibility into an issue of responsiveness. The local preference issue arose because there was only one apparent supplier of the services sought on-island, and GPA sought offers for an off-island offeror. The Decision held there could be no award to an off-island offeror until its offered price is compared to a local offerors price and the 15% local preference differential is determined.
d.
e.
f.
5.
OPA-PA-07-006, In the Appeal of Great West Retirement Services (vs GovGuam Retirement Fund) a. This Appeal is from an RFP. The issue was whether the Retirement Fund improperly refused to negotiate in good faith. The Decision held it is improper to discontinue negotiations with a best qualified offeror (and commence negotiations with the next up the list) before
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there has been a determination that its best and final offer is not fair and reasonable. 6. OPA-PA-07-007, In the Appeal of Dick Pacific Construction Company, Ltd (vs GIAA) a. This involved the issue whether failure to provide personnel rsums and proof of a Guam business license in the bid envelope as mandated by an IFB renders the bid non-responsive. In this case the holding was, yes. While that case was distinguished and likely overruled as discussed in Article VI.K.4.e above, in the context of the J&G Construction appeal which held that the IFB cannot convert matters of responsibility into issues of responsiveness, there was an additional element worth mentioning. This case involved, also, the requirement that the bidder, or a bidders subcontractor, have a specialty reinforced steel license, although the main part of the construction work solicited was to improve airport utilities infrastructure. In the outline above, the author made the argument that, although usually an issue of responsibility, issues of speciality licensure can be considered an issue of responsiveness where the licensed work is the thing which the government desires. In this case, it is arguable that the licensed work is only incidental to the broader solicitation for whole infrastructure, so the specialty steel reinforcement license should be considered an issue of bidder responsibility, not responsiveness. Cibinic and Nash (at p 414) admit that decisions concerning the requirement of licenses, as an issue of responsibility, have been somewhat confusing. They distill two rules: (1) First, an affirmative determination of responsibility may be made if the offeror can obtain the license or permit prior to the time of performance even though it is has not been obtained prior to award. Second, a [negative] determination of nonresponsibility will be upheld if the contracting officer reasonably concludes that a required or necessary license or permit will, if not obtained, impair performance. This will not usually be the case with general licenses, such as business licenses. It is most salient to issues concerning specialty trades or professional licenses. Also note that obtaining a license can, in many cases, be the result of subcontracting licensed work to a properly licensed subcontractor. In these cases, the matter usually
b.
c.
(2)
(3)
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revolves on whether the contractor retains sufficient ownership of the project, which is sometimes expressed in the bid specifications as a specified percentage of the work subcontracted. 7. OPA-PA-07-008, In the Appeal of Advance Management, Inc. (vs GPSS) a. This appeal was dismissed, but raised the interesting issue whether the OPA has jurisdiction to hear issues of Wage Determination compliance. The case was dismissed on the jurisdictional ground that there had been no protest to or decision from the agency. 5 GCA 5801 imposes on all contractors for the provision of a service to GovGuam to pay those of their employees whose purpose is the direct delivery of the service contracted, wage rates established by the Guam DOL Wage Determination schedule. Call this the Wage Determination law. It is a labor law obligation, not a procurement obligation. It is nevertheless found in the standard terms and conditions of most GovGuam IFBs and RFPs, and can be referred to there as the Wage Determination clause. 5 GCA 5805 creates procurement confusion by directing the CPO to require bidders to submit declarations [made under penalty of perjury] to demonstrate their compliance with the Wage Determination law. Such a demonstration is not language expressing any promissory or contractual obligation. The Notice of Appeal did not clearly specify the ground for protest, alleging merely a serious defect in the bid and award process, but the gist of the complaint seemed to be that the winning bidder was non-responsive or non-responsible because its pricing revealed it most likely would not comply with the Wage Determination requirement, and the agency should have realized that and was somehow complicit in the Wage Determination violation by making the award. (1) There is a colorable legal basis for making that argument because 5 GCA 5211(g) requires that the award only be given to a bidder whose bid amount is sufficient to comply with [the Wage Determination law]. See Article XVIII.E.6.c, above. The problem is, the law does not require, as a condition of procurement award, compliance with the specifics of the Wage Determination law; it requires only that the bid award give the bidder enough money, in total, to comply. The author notes that bidders are not required to break down their costings nor allocate their fees to any such cost accounting, thus believes that this a standard whose
b.
c.
d.
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application is too vague and uncertain to enforce, or for an agency to judge, in the procurement context. (2) The author notes that if a prospective contractor has been found previously to have been in violation of the wage law, especially when under government contract, that such a finding should raise a serious issue of bidder responsibility. Whether that would be grounds to protest would be another matter; see the discussion in Article VI.K.10 above regarding who can successfully challenge a finding of responsibility.
e.
This is an example of a provision appearing in a solicitation that has nothing to do with the procurement, solicitation or contract. It is intended to implement a collateral legal obligation and merely clouds procurement law. As such, it is not a ground for agency protest under 5 GCA 5425(a) (i.e., made in connection with the method of source selection, solicitation or award), which is a predicate to a procurement appeal to OPA. It is not, therefore, within the jurisdiction of OPA to enforce such a provision. Furthermore, 5 GCA 5803 identifies Guam DOL as the agency given oversight and enforcement authority of the Wage Determination law, and 5804 provides a separate sanction (disqualification from GovGuam contracting) for a contractor who violates the clause, which may only be appealed to the Superior Court. Therefore, any alleged violation of the Wage Determination clause should not even be considered a contract dispute between the procuring agency and the contractor. The Wage Determination clause in a solicitation is merely intended to give notice to bidders/offerors of their labor law obligations; it does not imply or import any contractual obligation between the soliciting agency and the contractor. In Pacific Security Alarm, Inc., vs Guam Power Authority, CV 130404, the judge distinguished a New York case that found a bid to be nonresponsive if it did not comply with the prevailing wage requirement and noted that, while Guam law mandates payment of a prevailing wage, it does not mandate that benefits be included in price quotes for Invitations for Bids.
f.
g.
8.
OPA-PA-07-009, In the Appeal of Pacific Security Alarm, Inc. (vs GMHA) a. This involved an IFB. The agency chose to cancel the bids after the bids were opened and the bid prices made known. The Decision held an agency can only cancel a bid prior to bid opening. After bid opening, an agency may only reject all bids (as
b.
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a means of disposing of the solicitation). c. The Decision then held the cancellation was void, and it was up to the agency as to how to proceed with dealing with the bids. Here there was, however, a game-changing event that occurred between the time the agency wrongly cancelled the bid and the time, after the Decision, when it had to consider the bids. At the time of cancellation, the agency lacked funds to meet the bid, so clearly that would have been adequate reason to reject in the best interests of the agency. But, by the time the Decision was made, the agency had obtained sufficient funds, so rejecting all bids was not then justified by lack of funds. It appears this left the agency with the only option of awarding the bid to the lowest bidder. Compare the reasons allowed to cancel a bid before opening (2 GAR 3115(d)(1)(B)) with reasons allowed to reject all bids after opening ( 3115(d)(2)(A).
d.
e.
9.
OPA-PA-07-010, In the Appeal of Far East Equipment Company, LLC (vs GSA for PAG) a. This was an appeal of an IFB, involving a dispute over what the specifications required and what the 2 bidders could and did offer. The requirements were for particularly sized and powered fork lifts. The Decision determined that the Appellant, who bid the lowest price, admitted it did not meet the exact specifications, but argued the proposed winner was non-responsive because its offered fork lift exceeded the minimum specifications; and that Appellant only deviated from the specifications by an immaterial degree (see, 2 GAR 3109(m)(4)(B): a minor mistake where the effect on quality is negligible so does not prejudice other bidders.). The Decision noted the minimal difference between Appellants low bid product and the specifications but did not critically dispute the agencys determination of non-responsiveness based on its own judgment of materiality of Appellants deviation from specifications.
b.
c.
It is true that as between responsive bids, the lowest price wins even if another bid offers a product with superior specifications. The acceptability evaluation is not conducted for the purpose of determining whether one bidders item is superior to another, but only to determine that a bidders offering is acceptable as set forth in the [IFB]. (2 GAR 3109(n)(3).) Second, compare this to the O&M Energy appeal mentioned above
d.
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(OPA-PA-08-004) where the Public Auditor very carefully scrutinized the agencys determination of materiality, whereas here the Decision was deferential. Here, the difference in bid prices was relatively minimal, but in O&M the difference was extreme. e. The author observes that where a bidder has a product that is close but not up to specifications, the better time to protest is as soon as the specifications are known, not after the bid is opened. This observation is coupled with a caveat that the usual course is for a party to seek clarification, but if that is not forthcoming, or coming to your satisfaction, be mindful of the calendar and timely file your protest on the IFB on the basis of unduly restrictive specifications. If the specifications truly are only minimally different from another product, and particularly where the products wanted are standard, commercially available ones, the agency should show reasonable acceptance of enough flexibility in the specifications to encourage competition, so long as its minimum requirements can be met. But, once the bids are submitted and opened, it is too late to make that argument.
10.
OPA-PA-07-011, In the Appeal of JMI Medical Systems, Inc. (vs GMHA) a. This was an Appeal involving an IFB. The Appellant was not the low bidder; indeed, the low bid was so low that the agency decided during the course of events to award a contract for double the quantity of product specified in the IFB. There was much confusion on Appellants part whether the bid was for equipment and supplies or for the equipment alone. The Appellant protested that the low bid was non-responsive because it did not include a bid for both supplies and equipment, although the Appellant had bid both. The agency issued its final decision on the protest after a request for reconsideration and the next day awarded the contract to the low bidder, issuing two purchase orders for two pieces of the same equipment. The Public Auditor found the bid clearly only sought equipment (not equipment and supplies), so the low bid was responsive. Curiously, the Decision raised an issue of the automatic stay, saying after the appeal began, GMHA continued with the award and purchase. This is curious because the award and purchase orders were issued on November 28, yet the Appeal was not filed until December 12. What was left to be done that violated the proscription against proceeding further with the solicitation or with the award of the contract? The author would assume that execution and performance of the contract post-award would be
b.
c.
d.
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outside the scope of the automatic stay. This ends up in the authors mind as being only of passing interest because the stay was not invoked. e. The Decision puzzled over a legal reason to find that an award for 2 pieces of equipment when only one was solicited was improper, drifting off into discussions of indefinite quantity contracts (this wasnt one) and general policy statements. (1) The author considers the discussion to be needlessly floundering and off-base on this issue. The government simply cannot enter into a contract (or issue a purchase order) to buy something it did not solicit. [A]ll territorial contracts shall be awarded by one of the approved methods of source selection. (5 GCA 5210(a).) The contract shall be awarded to the lowest responsible bidder whose bid meets the requirements set forth in the IFB. (5 GCA 5211(g).) The IFB includes the purchase description (5 GCA 5211(b)), which describes the supplies, services or construction to be purchased (5 GCA 5201(d). Here, the solicitation plainly was for one piece of equipment, not two. There was no authority to purchase the second one, which is the tortuous result the Decision correctly reached.
f.
For the author, the most significant holding of this Decision is its statement that agencies cannot evaluate an IFB using the evaluation process (negotiations) and standards (selecting best qualified rather than lowest responsive bid) of an RFP, citing the Fleet Services Guam Supreme Court Decision discussed above. As it was, the best qualified was also the low bidder in this case, so that was not an issue, but the Decision did refute the use of negotiations in this case. The result, correctly reached, was to award the IFB for one piece of equipment and require a new solicitation if the agency remained intent on purchasing a second piece of equipment.
g.
11.
OPA-PA-08-008, In the Appeal of Latte Treatment Center, Inc. (vs DMHSA) a. This was an appeal of an RFP issued for professional care services for children with severe emotional conditions and related such. The Decision cancelled the RFP altogether, principally because the agency failed to properly document the procurement record. The author supports the result, but respectfully quibbles with some of the statements made in reaching the Decision. The agency argued the Appellant could not be an aggrieved offeror because it substantively lacked an essential professional
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license to perform the work, therefor the OPA lacked jurisdiction to hear the appeal. Note that this is a requirement for bringing the protest in the first instance, and not a direct requirement for bringing an appeal. More substantively, though, this argument puts the carabao before the cart because that was a contested issue, and the Decision correctly found Appellant was an aggrieved offeror because the Appellant alleged other violations of Guams Procurement Laws and Regulations relating to DMHSAs solicitation and award. (1) But in doing so, the statements were made in the Decision that a losing bidder is an aggrieved bidder, and, LTC is an aggrieved offeror because it was not selected for the award. The author is concerned those statements venture too far afield. All that is required to bring an appeal is that the bidder may be aggrieved. If all losing bidders were aggrieved by definition, as the statements suggest, then every award is subject to appeal even if the bidder may not be aggrieved by any error or wrongdoing. In Latte Treatment Center, the Appellant raised several issues by which it may be aggrieved, and it was on that basis that the OPA had jurisdiction, not on the basis simply that the Appellant is aggrieved because it was not selected. If a rule is recognized that notice of non-selection means the unselected bidders are aggrieved simply by reason of not being selected, regardless of knowledge of NO facts by which they may be aggrieved by error or wrongdoing, then EVERY losing bidder will be OBLIGED to file a protest when the award to another bidder is announced to protect the 14 day filing deadline, even if, at that time, they dont know any facts of error or wrongdoing by which they may be aggrieved. That would imperil the whole appeal process, and cannot be the meaning or intent of the law and regulations. Bear in mind that delay in bringing a protest until after facts of aggrievement are discovered does not mean the procurement process grinds to a halt. First, the automatic stay can be lifted. Second, the contract, if already awarded, is not subject to any automatic stay, nor is any award necessarily cancelled by the protest because it can be affirmed even if the person awarded the contract engaged in fraud. These matters have been discussed above; see Article XVII. This discussion is not intended to be idle nit-picking. This
(2)
(3)
(4)
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fine point bears on the timing of when the period for filing protests begins. The author contested that exact point before the Public Auditor in the CNMI (which differs only in requiring a 10 day protest filing period compared to Guams 14 day period). There, the agency held that the Protestants protest must have been filed within 10 days of receipt of notice of intent to award to another bidder, even though the Protestant did not have, and could not have, any knowledge, at that time, of facts giving rise to the Appellants claim to being aggrieved. The Protestant discovered, after documents were later disclosed by the agency, facts indicating it may have been aggrieved by alleged errors in the evaluation process, and filed its protest within 10 days of that discovery. (a) In its Final Decision and Decision on Request for Reconsideration in Appeal of Island Business Systems & Supplies, Appeal No. BP-A057, the CNMI OPA ruled that notice of award to another is sufficient to trigger the protest filing period, regardless whether the Protestor had knowledge of facts by which it may be aggrieved. i) The Public Auditor acknowledged Appellant had no knowledge, and could not have had knowledge, of the facts by which it may have been aggrieved until such documents were revealed (it is possible that IBSS did not know how it was aggrieved), but nevertheless said it was aggrievedon the day it received notice of award to another bidder., without more. The CNMI Public Auditor, in his decision on reconsideration, supported this rule by saying, every rejected proposer could merely bide its time until it found some basis upon which to protest an award, which would wreak havoc on the procurement process and the need for finality, issuance of a valid contract, and the products or services that are the subject of the contract. The upshot seems to be, in the CNMI, if you do not win the award, you must protest even before you have found some basis upon which to protest an award. As the opinion stated, on the date the Appellant was notified
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ii)
iii)
that another bidder got the award, it may not have known how it was aggrieved, but it certainly knew that it was aggrieved. (b) The CNMI regulation (NMIAC 70-30.3-501(a)(1)), substantively identical to Guam, only allows protests to be filed by parties who may be aggrieved in connection with the bid, and the protest must be filed within ten days after such aggrieved person knows or should have known of the facts giving rise thereto, which, to the author would mean the parties cannot protest until they have knowledge or should have knowledge of a factual basis for the protest. But that would not appear to be the CNMI case, based on this decision, which now seems to require rejected bidders and proposers to protest first, in order to secure their filing deadline, and seek to find a basis for the protest afterwards. In the CNMI case, the Public Auditors decision seemed to turn on his concern that the Appellant spent too much time (24 days 16 working days in the finding of the Public Auditor) puzzling over the notice of award before it requested documents from the agency supporting the proposal evaluation and award. i) The Public Auditor said such a request for documents may have possibly stayed the time to file a protest, though there is no provision in the regulation imposing such a stay nor discretion granted to allow it. Filing deadlines are generally treated strictly. The Public Auditor overlooked the fact that, by the time the agency actually supplied the information requested, it would have been too late to file a protest anyway if the filing period was triggered by mere notice of award. He did not provide any authority to provide any hope that such a request might have possibly stayed the filing deadline.
(c)
ii)
(d)
Note that Guam regulations do not specify any time limit for making a Request for Reasons, and CNMI regulations do not make provision for any such Request at all.
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(e)
Note that the CNMI regulations do not have the explicit sanctions for filing frivolous or disruptive protests that Guam does (2 GAR 9101(g)(2)), so filing protests when there is no knowledge of the facts by which a person may be aggrieved may not be so perilous a proposition in the CNMI. But beware the CNMI does have the broad right to disbar or suspend for any cause determined to be so serious and compelling as to affect responsibility as a government contractor (NMIAC 70-30.3760(b)(5)). Presumably, following the Public Auditors advice that a bidder is, ipso facto, aggrieved when notified of award to another would constitute a defense to any sanction for filing factually baseless protests in the CNMI; but, beware of the dilemma. Finally, note that the CNMI procurement law and regulations are similar in general principal to Guam procurement, but differ significantly in technical detail. Discussion of CNMI procurement law and regulation is beyond the scope of this paper.
(f)
12.
OPA-PA-08-009, In the Appeal of Captain, Hutapea and Associates (vs GHURA) a. This involved a factual dispute over the requirements of an RFP. The Appellant argued that it should have been selected as the best offeror because it exclusively had a necessary data base of information not available to the other offeror. The Public Auditor was not convinced the database was necessary nor was it required by the specifications. The take-away from this decision is that the Public Auditor is deferential to a determination of the agencys judgment of the judgmental factors in an RFP, such as the comparative experience and past performance of the competing offerors and the content of their competing methodologies, absent clear and convincing evidence of bias or other partial treatment. Such a standard makes it incumbent on appellants to produce hard evidence rather than rely more on vague statements of bias or other paranoia to entice the Public Auditor to scrutinize the decision makers as opposed to the decision itself. Note, in comparison to subjective judgmental evaluations of RFPs, in evaluating an IFB, where price consideration is concerned,
b.
c.
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[t]hose criteria that will affect the bid price and be considered in evaluation for award shall be objectively measurable. (5 GCA 5211(e).). 13. OPA-PA-09-002, In the Appeal of Teal Pacific, LLC (vs GPSS) a. As with its prior appeal (OPA-PA-08-010), Appellants appeal was dismissed when the Public Auditor recused herself, but here at the request of Appellant, for the stated reasons that she and her husband have doctor/patient relationships with one principal of the Appellant, and she and her husband also have had a casual acquaintance with another principal, notwithstanding the Public Auditors belief those relationships would not prejudice her actions in the matter.
14.
OPA-PA-09-005, In the Appeal of Guam Community Improvement Foundation, Inc., (vs DPW) a. Ramifications of this appeal are discussed extensively above. This comment here is merely to note that the Decision in the case went against the Appellant and to make a couple of additional observations based on a similar result (though different factual setting) in Appeal of Baltimore Motor Coach Company, MSBCA No. 1216, Jan 8, 1985. (1) First, as regards standing, and, noting the discussion of who is an aggrieved person in the Article on Procurement Protests, above, that persons who are not competitively disadvantaged are not aggrieved, the notion may be more aptly, or at least obviously, applied to IFBs than RFPs. In Baltimore Coach, involving an RFP, the appellant was determined to be fourth best qualified, arguably too remote to be competitively disadvantaged, and therefore interested. The appellant argued that the evaluation process was so patently and fundamentally unfair that it was denied an opportunity to compete equally. The Appeals Board said that such a fundamental issue, affecting its right to compete (not limited to affecting its place in the competition), justified standing, because, at that stage, the Board could not say the appellant was not aggrieved. (At p. 94.) Second, notwithstanding being determined to be an interested party, the Board in Baltimore Coach ruled that an Appellant seeking to establish that its competitive position was affected by discriminatory actions nevertheless carries the burden [of proof]. It said bias will not be attributed to
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procurement officials based on inference or supposition. (At p. 8.) The Baltimore Coach appellant did not prevail on appeal, either. b. Procedural status of protest: As of this version of the Primer, the OPA Decision is abated by an appeal taken by Appellant GCIF to the Guam Superior Court (Guam Community Improvement Foundation, Inc., vs OPA, SP0247-09). A Decision and Order in that action given April 13, 2010 may also be abated; it is reported that GCIF will appeal again to the Guam Supreme Court. (1) In the Superior Court Decision, the Judge (Hon. Arthur R. Barcinas) ruled on the style of action an appellant should take from an OPA decision to the Superior Court. The confusion in this issue, and the need for judicial guidance, is discussed in Article XXIII.D and following, above. The Court noted an inherent conflict in the legislation and agreed that there could be confusion as to the specific method of obtaining judicial review of a decision of the Public Auditor, but ruled that the appropriate action to seek review of the OPA Decision is by way of a civil action for review, not writ of mandate. The Court indicated the procedure for taking a review action to the Superior Court would follow the notice requirements and procedural posture of a government claim under 5 GCA 5480(f). (a) The Court placed particular emphasis on the doctrine of exhaustion of administrative remedies before seeking court review: the Pacific Rock court intentionally and specifically did not rescind the requirement that a party seeking judicial relief is required to follow the mandates of the Guam Procurement Law ..., reaffirming that a protestant must proceed as directed under the Guam Procurement Law in order to obtain judicial review. Since the action was taken as a writ of mandate, the Petitioner has failed to exhaust its administrative and legal remedies under the Guam Procurement Law before filing a petition for a writ of mandate.... i) Does this imply that if a civil action is taken but rejected the appellant could then petition for a writ of mandate, having finally exhausted its remedies?
(b)
The Superior Court Decision distinguished between the form of action required to review a final OPA
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decision and the form appropriate to review a decision taken by the Public Auditor in the course of an appeal to OPA, specifically here, a decision not to disclose information in an offer prior to final award. (Refer to Article VIII.D.14, above for discussion of disclosure of information in the RFP process.) Referring to 5 GCA 5485 (which deals with the right of any member of the public to bring a court action, by way of complaint, to enjoin the government from withholding procurement data), the court ruled that the writ of mandate in this case qualified broadly as a form of complaint which the Court would hear to determine the disclosure issue. (c) The author is puzzled by the reasons given for the distinctions and results (in light of the Courts quote from prior Guam law that its procedural rules were designed to discourage battles over mere form and eradicate needless procedural controversies, and to simplify practice by minimizing procedural encumbrances), but not being a litigator with any depth of knowledge of rules of procedure, does not offer an opinion. The author is nevertheless grateful for the black letter guidance, assuming the issue is upheld if, as indicated, appealed.
15.
OPA-PA-09-010, In the Appeal of ASC Trust Corporation, (vs GGRF) a. This was an appeal from an RFP to provide financial services. This case illustrates two issues identified in this Primer which have not been presented or determined by OPA or Guam courts. First, the extent of the limitation of the RFP process to strictly professional services (see Article VIII.B.1 above), and, second, the confusion created by improperly considering price as an evaluation factor for determining and ranking qualified offerors (see Article VIII.D.7.c.(3)). This appeal did not raise either issue for discussion. In this appeal, the agency specified that price would be a factor of evaluation, and it carried a 40% relative weighting, compared to a 60% weighting to the technical factors. The appellant offered a price lower than the selected offeror, and argued that the process was flawed because it did not obtain the full value of its lower price in the evaluation. The Appellant argued that if its price had been fully considered, it would have been selected as best qualified. This highlights the incongruity of using price as an evaluation factor in the qualification determination and ranking process. As the text
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explains, price is not intended to be an evaluation factor in determining qualification or best qualified, but only to determine what is fair and reasonable in the negotiation process, after evaluation and ranking. 16. OPA-PA-10-002, In the Appeal of Teleguam Holdings, LLC dba GTA Telecom, (vs GSA) a. This appeal determined that an ethical conflict of interest is a basis for disqualifying the Public Auditor from hearing an Appeal, as discussed in Article XVIII.F.4.c.(4), above. In doing so, she has perhaps led the way for other government employees by setting a benchmark of the appropriate conduct expected of them in procurement matters. Review the discussion of ethical conflicts of interest in Article II.I.5.c.(2), above. In this case, the Public Auditor identified an ethical conflict because her adult stepson is a lawyer who is one of Appellant s lawyers. Her stepson is deemed by 5 GCA 5601(e)(1) to have a financial interest in Appellant by virtue of receiving compensation from Appellant (more than $2,500 per year) for legal services unrelated to this appeal. Her relationship with her stepson and his financial interest in the Appellant, she concludes, creates an impermissible conflict of interest under 5 GCA 5628(a)(1), arising from her indirect participation (5 GCA 5601(d)) in the procurement process because she is called upon to review a procurement matter in which her stepson has a financial interest. (1) Actually, the Public Auditor went beyond the requirements of the conflict of interest law. (a) The indirect participation she alludes to specifically refers to the method of participation, e.g., decision, approval, recommendation, etc. She is correct that she has an indirect participation, and she is correct that her stepson has a financial interest, as discussed above. But the conflict of interest provision (5 GCA 5628) only applies to participation (directly or indirectly) when the employee or any member of the employees immediate family has a financial interest.
b.
c.
(b)
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i)
Immediate Family means a spouse, children, parents, brothers and sisters. (5 GCA 5601(g).) It has been reported that the Attorney General, when asked to review a transaction involving a government employee, opined that an in-law (in that case a daughter-inlaw) did not fall within the immediate family definition. In-laws are not a legal concept but a term used in customary social terminology. Similarly, step relations are not legal relations but customary social relations. If the step child is adopted, for instance, the child becomes the legal child and is no longer step in the legal sense. In this Decision, there is no indication that the Public Auditor had adopted the step-son, so the author would conclude there was no legal duty to disqualify herself on the conflict of interest basis. Query whether, without a legal duty, there was any legal basis to disqualify herself?
ii)
17.
OPA-PA-09-012, In the Appeal of Z4 Corporation (vs GSA/DOE) a. This appeal had a convoluted history, involving a bid, protest, appeal, re-bid, protest and appeal again, in the midst of which there was a game of hot potato over procurement authority being passed back and forth between GSA and DOE. It was, however, in the end a very simple issue: the re-bid failed to include specifications, thus the IFB was invalid. Along the way, however, the Decision made several observations or rulings that are worthy of discussion; the author respectfully disagrees in many instances. The ultimate holding of the public auditor was to the effect that the absence of specification created fundamental unfairness between the bidders. (P 16, ln 7-8.) Actually, it is a bit more fundamental than that, and raising any issue of fairness simply clouds the analysis and masks the fundamental issue. (1) Without specifications there is simply no basis for the solicitation. The purpose of a specification is to serve as a basis for obtaining a supply, service or construction item.... (2 GAR 4102(a)(1).) IFBs shall include a purchase description. (5 GCA 5211(b).) Purchase Description ... includes specifications attached to, or made a part of, the
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solicitation. (5 GCA 5201(d).) Without specifications, there was no purchase description; without a purchase description there simply was no IFB. End of story. c. The Public Auditor declared, DOE is authorized to promulgate its own procurement regulations, citing as authority 5 GCA 5131. (Decision, pp 10-11.) The author disputes this statement. The author considers this another example of Guam procurement lore overlooking Guam procurement law. (1) As pointed out in the text at Article III.G.12 above, 5131 does no such thing. 5131 says, [e]ach governmental body ... shall adopt the procurement regulations promulgated pursuant to 5130(a).... The only regulations authorized to be promulgated pursuant to 5130(a) are the ones promulgated by the Policy Office. 5131, then, simply requires the agencies to adopt the Policy Office regulations, found in 2 GAR Division 4, as their own. It provides no basis or authority for the agencies to draft, adopt or promulgate their own regulations. Only the Policy Office is given the responsibility to adopt procurement regulations, and the Policy Office cannot delegate that responsibility; not to the CPO, the Governor, an agency, or anyone. (5 GCA 5130(a) and (b).) Even if the agencies have procurement authority delegated to them by the CPO or Director of DPW, since the CPO and Director have no authority to promulgate procurement regulations, they cannot delegate that authority to the agencies. All that they might be able to delegate is their own power to adopt procedures for governing their own internal operations. Procedural rules for internal operations cannot rise to the authority or subject matter of, nor override, procurement regulations. As the introductory Official Comment to the Procurement Act explains, this Act intends that the Policy Office adopt implementing regulations.
(2)
d.
The Public Auditor then stated that DOEs regulations authorized the Director of Education to serve as Procurement Officer of DOE with respect to supplies, services and construction. (Decision, at p 11.) Again, this is not the law. Even if DOE has authority to promulgate procurement regulations (which it doesnt, as above), DOEs regulations cannot usurp the authority of the Department of Public Works for construction activities, which was legislatively assigned only to DPW in 5 GCA 5113(a). DPW may delegate that authority, but any such delegation is as limited and conditioned as is the authority of the CPO (5 GCA 5114), as discussed in the text.
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(1)
There was no evidence mentioned in the Decision that DPW had delegated any authority to DOE to conduct the procurement in this case. Since the procurement was initiated by DOE and inherited by GSA, neither of them were authorized to instigate or conduct the solicitation, and that would be an independent ground for ruling the solicitation unlawful and without authority, without further discussion.
e.
The Public Auditors Decision, then proceeded to say that, under the DOEs regulations, DOE was authorized to delegate procurement authority to designees or to any governmental body or official. (Decision, p 11.) This is, again, not the law. (1) A grant of a power to delegate and an actual delegation of authority does not imply any power to substitute or redelegate the authority; any such right must be specifically granted. (18 GCA 20501.) Therefore, even if the CPO did delegate authority to the head of the purchasing agency (DOE) under the CPOs limited power of delegation granted in 5 GCA 5114, discussed above, DOE would have no power of substitution or re-delegation. Taken literally, this broad statement in the Decision would allow DOE to delegate its procurement authority to GPA or GMHA. Of course that is not allowed. That would totally undo the carefully constructed centralized procurement regime set out in the Procurement Act. Any such delegation would violate the central premise of the Guam Procurement Act. As the Official Comment to 5 GCA 5001 explains, this Act will regularize and centralize procurement on Guam. See the discussion in Article III.G above.
(2)
18.
OPA-PA-10-005, In the Appeal of Pacific Data Systems, Inc. [vs GCC] a. This Appeal involved an IFB to provide a VOIP communications system to Guam Community College. GTA was the low bidder. The Appellant, PDS, claimed GTAs bid was non-responsive because it failed to properly disclose certain ownership details in the bid package, the so-called Major Shareholders Disclosure Affidavit. As discussed in the text at Article VI.K.4 above, information regarding the identity and character of a bidder or offeror is generally a matter of responsibility, bearing on the integrity and reliability of the person. Responsibility is not a matter determined by the bid package. Agencies do not have the authority to transmute
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an issue of responsibility into an issue of responsiveness by so-called mandates in the solicitation documents. A failure to provide information regarding responsibility in the solicitation submission is curable by providing it in a inquiry into responsibility made before award. While agencies do not have that power, the Legislature clearly does. c. As discussed in the text at Article VI.I above, responsiveness concerns whether a bidder has offered unequivocally in its bid documents to provide supplies in conformity with all material terms and conditions of a solicitation for sealed bids. Materiality is defined in the regulations in terms of non-negligible matters that affect bidder prejudice, such as contractual conditions. (2 GAR 3109(m)(4)(B).) In this case, the agency, GCC, determined that the failure to provide the ownership details was a curable matter of responsibility. In her Decision in this case, the Public Auditor determined otherwise. She discerned that the basis of the requirement to provide this ownership information was law, not simply a mandate of the IFB, based on a plain meaning interpretation of 5 GCA 5233. That section says, [A]s a condition of bidding, any [entity] doing business with the government of Guam shall submit an affidavit under oath detailing ownership interests greater than 10%. The Public Auditor ruled that 5233, coupled with a requirement of the IFB which parrots the law, puts GTAs responsiveness at issue; that is, the requirement to provide an accurate Major Shareholder Disclosure Affidavit in the bid package is a matter of responsiveness, a contractual condition, and not a curable matter of responsibility. The Public Auditor based this ruling on the plain meaning rule of statutory construction. The plain meaning of this clear statutory language is that bidding is conditional, based on bidder [ownership disclosure]. (Decision, at p 12.) (1) The statute says the disclosure is required as a condition of bidding. The ruling reverses the terms of the statute by concluding bidding is conditional; the author believes these are not equivalences and serve to underline the ambiguities in the clause. Given the varieties of conditions in the law, and the differences in consequences and effects between them, the bidding is conditional conclusion is a re-construction of the actual language and is simply an arbitrary choice, made without articulated analysis, between competing meanings, as discussed below.
d.
e.
f.
g.
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(2)
The Guam Supreme Court has used the plain meaning rule to construe statutory as well as private contractual and judicial or other such legal language. See, e.g., San Miguel v. Dep't of Public Works, 2008 Guam 3, 26, and Hart v. Hart, 2008 Guam 11, at 20-22, and Wasson v. Berg, 2007 Guam 16, 11 et seq. See, also, 18 GCA 80201.
h.
The gist of the plain meaning rule of construction is, unless there is ambiguity in the language used, you look no further than a dictionary to determine the meaning of a word or clause; you do not attempt to divine the purpose or intent of a provision to determine its character, scope, efficacy or consistency with its context. If, however, the meaning is not so patently and incontrovertibly plain, you dig deeper into policy and broader context and even extrinsic evidence to discern meaning and intent. In this instance, treating ownership information as responsiveness rather than responsibility goes against the whole body of law painstakenly distinguishing the two. (1) In this case, the Public Auditor said the disclosure requirement as a condition of bidding, plainly means bidding is conditional on disclosure. She said, [t]he plain meaning of this clear statutory language is bidding is conditional [based on disclosure]. (Decision , p 12.) (a) The author accepts that the Public Auditor could have reached her ruling based on a plain meaning of the condition of bidding clause, but believes it would require a strained interpretation for which a more logically consistent one could have, and should have, been made. While the interpretation may seem plain in colloquial usage, the language here is meant to have legal effect, so must be judged by legal meaning. Failure to do so is one reason why procurement lore and procurement law diverge.
(b)
(2)
Words and phrases are construed according to the context and the approved usage of language; but technical words and phrases, and such others as may have acquired a peculiar and appropriate meaning in law, or are defined in the succeeding section, are to be construed according to such peculiar and appropriate meaning or definition. (1 GCA 724.)
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(a)
Under this statutory rule of construction, you do not isolate one clause, here the introductory clause of 5233, from the context. The context of the whole section clearly and plainly involves a requirement to disclose ownership details, so the government knows more particularly with whom it is dealing. This is exactly what the requirement of a responsibility determination entails. To ignore this context violates the 1 GCA 724 as well as the plain meaning rule. The rules of statutory construction are intended to reach a result which is reasonable in context of the law, not one that does violence to it by arbitrary exception. Here it must be noted that the Disclosure requirement of 5 GCA 5233 is contained in the context of Part D of Article 3 of the Procurement Act, entitled Qualification and Duties, the first section of which ( 5030) is the statutory basis for determination of responsibility of bidders and offerors. This context aligns the Disclosure requirement more with responsibility determinations than responsiveness evaluations.
(b)
i.
The author asserts the clause is not as plain as the Public Auditor found it to be; it contains ambiguities on it face and in the context of the sentence and other context in which it is found. Application of the plain meaning rule does not require, or allow, a blinkered or simplistic interpretation. (1) The first ambiguity is in the use of the term condition; as in disclosure is a condition. But, what kind of condition? This is a legal term that must be interpreted as such; it is not a colloquialism. Conditions may be precedent, concurrent, or subsequent. (18 GCA 80402.) Given the variety of conditions which the law recognizes, this is an ambiguity on its face which the Decision simply glossed over or failed to recognize. (a) Not only are such conditions different in meaning, they can have significantly different consequences. A condition precedent precludes the effectiveness of agreement, whereas a condition subsequent suspends effectiveness, but not obligation, until some later event.
(2)
The Public Auditor has presumed, but without any

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discussion, that the condition here is a condition precedent, a condition which precluded bid consideration. Given the absence of articulated analysis, this is an arbitrary choice between competing interpretations of which kind of condition the statute intends. (a) The Public Auditors interpretation was that bidding was conditional on disclosure, and the Decision applied that interpretation in the manner of a condition precedent by precluding consideration of the bid without the disclosure. The actual language of the statute, however, as opposed to the Public Auditors interpretation, is as a condition of bidding the bidder must disclose ownership. There is nothing in this language which precludes an interpretation that the condition of bidding to provide disclosure is one that is operative subsequent to opening; the language, on its own, does not mandate a plain meaning conclusion of a condition precedent. If the condition in 5233 is a condition subsequent it could be satisfied after bid opening, much in the same manner in which the award to the low bid is subsequently determined. i) Such an interpretation is more reasonable in the context of procurement law by giving consistent effect to the distinctions between responsibility and responsiveness. Interpretation must be reasonable. (20 GCA 15134.) An interpretation which gives effect is preferred to one which makes void. (20 GCA 15133.)
(b)
(c)
(d)
It should be noted that the discussion above treats the evaluation of responsiveness and the determination of responsibility as the functional equivalent of a condition; neither is, in point of law, a condition. The comparison is by analogy only. In fact, the only place in the Procurement Act where an action required in the procurement process is said to be as a condition is in 5 GCA 5233. The use of the as a condition of bidding clause in 5233 was inartful at best, and ambiguous at least.
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i)
The law does not require the submission of a responsive bid as a condition of bidding, nor is the requirement that the bidder be responsible a condition of bidding. Only responsive bids can be accepted; it is not a condition of bidding. Only responsible bidders are entitled to award; it is not a condition of bidding. The mere fact that 5233 defines the disclosure requirement as a condition of bidding should raise red flags as to what is really intended, because it stands out like a sore thumb in variance from the norms of the statutory scheme of the procurement regime. The submission of a responsive bid or offer is part of contract formation and necessary to evidence contract acceptance; it is necessary to empower the government to conclude contract formation by simply saying I accept. It is an essential part of the offer, the failure of which results in no contract formation. Conditions, on the other hand, presume contract formation but excuse or delay performance, without liability for breach. Conditions can be waived by the party intended to be benefitted. But, responsiveness is required by law and cannot be waived.
ii)
iii)
iv)
(e)
The author is inclined to think that, despite the express condition terminology, 5233 was not intended to be a condition at all, but is intended to be an essential standard of responsibility which must be considered under 2 GAR 3116(b)(2), admitting that this conclusion could be better served by amending the legislative language. i) This conclusion is based on a reading and understanding of 5 GCA 5030. This statute requires that matters of responsibility be determined by regulation, not statute. The regulations did not require any specific type of ownership disclosure, contemplating a
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principle-based method of responsibility determination to a check-the-box approach. ii) It should be remembered that the low bidder was disqualified for failure to provide ownership details in its bid package. Disclosure was not a condition of the contract, it was, as the Public Auditor ruled, a condition of bidding. The untimely failure to disclose minority ownership detail does not prejudice other bidders, because bidder prejudice only affects matters of price, quantity, quality, delivery and contractual conditions. (2 GAR 3109(m)(B)(4).) 3109(m)(B)(4) says [m]inor informalities ... or insignificant mistakes ... can be waived or corrected without prejudice to other bidders; that is, the effect on price, quantity, quality, delivery or contractual conditions is negligible. a) Except, possibly, in this instance, issues of responsibility do result in prejudice to other bidders. If a bidder is not responsible, that does not increase or decrease the position of the other bidders. A nonresponsible bidder only prejudices the government; it may place it at risk of not getting its expected performance. In this case, the government did an inquiry into its determination of responsibility and did not find the bidder nonresponsible. The low bid was set aside and the government required to pay a higher bidder due to a simple clerical error that did not prejudice any bidder. The government purse should not whimsically be put to risk of curable, non-prejudicial clerical error.
iii)
iv)
The author surmises that some event occurred prompting a Senator to propose this specific disclosure as a legislative change (it is
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not derived from the ABA Model Code); the point is, this is the only statute whose subject matter deals with a specific standard of responsibility. Rather than try to pound this square peg of responsibility into a round hole of responsiveness, a reasoned interpretation of 5233 would see it for what it is: not a condition, but an essential inquiry regarding responsibility. (3) The second ambiguity in 5233 is in the use of the term bidding; as in a condition of bidding. This plainly refers to a bid and the act of bidding. (a) The Government routinely requires the Major Shareholders Disclosure Statement in RFPs, as well. Parties to an RFP are offerors, not bidders, and engage in proposing, not bidding. Is the Disclosure Statement obligation only intended to apply to competitive sealed bidding and not to sole source, RFPs and other alternate methods of source selection? The author believes the term bidding, as plainly used in the statute, is not intended to restrict ownership disclosure to competitive sealed bidding alone. If so, the plain meaning of this statute is not so plain as declared. i) As said before, the subject matter of the statute is ownership, a question of responsibility. Responsibility determinations must be made of all bidders and offerors alike. (5 GCA 5230.) Why would minority ownership interests only be relevant to bidders and not offerors? The answer is simple; theyre not. 5233 was not intended to be restricted to bidders.
(b)
(c)
The plain meaning rule should not be used to interpret the separate words in a descriptive phrase for one purpose (condition) and not for another (of bidding); it is either, on the whole, plain or it is not. And if it is not plain, then you look to other means of interpretation to discern meaning and intent.
(4)
The facts that the clause is likely not intended to be restricted

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to bidding and fails to rule out the possibility of a responsibility-type condition subsequent, suggest ambiguity. If there is a reasonable suggestion of ambiguity, the plain meaning rule of construction does not apply. In that case, you look beyond the words of the clause alone to other implications suggested by the rest of the sentence, the paragraph, the code section, and the context in the Act, and even to extrinsic evidence for meaning. (5) By looking to the whole of the Disclosure requirement itself, it becomes more plain that the purpose is to allow a better scrutiny of the integrity of the vendor, to look behind an entity name to ascertain a better ethical conflicts check, all of which is a goal of the responsibility determination. The plain meaning rule is not intended to take words out of their context to determine if they have plain meaning on their own, and the context of 5 GCA 5233 does not support a construction that the opening clause demands a finding that the whole of the Disclosure requirement is a condition precedent that converts what would ordinarily be a matter of responsibility into a matter of responsiveness. (a) The Procurement Act does not require prequalification of bidders or offerors (see 5 GCA 5231 and 2 GAR 3117(a)(1)) ; such a requirement would burden government and vendors alike. Moreover, any pre-qualification alone does not substitute for a required finding of responsibility (id.). Bidder or offer responsibility is determined after bid opening, before award. There is no compelling reason to require all bidders to supply the required ownership information (which is what a responsiveness issue requires) when the information is only pertinent to the apparent winning low bid. The law neither does nor requires idle acts and disregards trifles. (20 GCA 15124 and 15125.) A low bidder is allowed to provide financial information and other information regarding personnel resources and expertise and satisfactory records of integrity after bid opening, as part of an inquiry into responsibility, outside the bid package, as part of the inquiry into a determination of responsibility.
(b)
(c)
(6)
How is it at all rational to conclude (especially by

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assumption rather than articulated reasonable analysis) that the particular ownership detail required by 5233 is so significantly different from all other information pertinent to a determination of responsibility that it alone must be included in the bid package? The reasonable interpretation of legal language prefers a result that is consistent with the whole legislative framework. The interpretation in this case reaches a result that is wholly inconsistent with that framework. (7) The author makes no judgment about the actual remedial result of the case. It may be that the errors of disclosure were too significant and too late to satisfy the demands of a reasonable determination of responsibility. But whatever the merits of that argument, the author respectfully submits it does not justify a ruling to the effect that the disclosure requirement of 5 GCA 5233 is, as a matter law, an issue of bid responsiveness.
j.
To hammer home that last comment, consider what would happen if the disclosure was accurately made, but revealed a clear ownership conflict of interest. The bid would have to be accepted as responsive. Could the conflicted bidder then be rejected as nonresponsible? Not on the rule enunciated. If the issue is truly one of responsiveness, and the bidder scrupulously complies with the disclosure requirement, then it cannot be used to judge responsibility. Issues of responsiveness and responsibility are judged by entirely different standards and procedures. The one disclosure requirement should not be used at the whim of a procurement officer to detect responsiveness or responsibility as the officer decides in any particular circumstance. Treating the disclosure requirement as a matter of responsiveness only serves to raise the cost of the solicitation to the government by playing a gotcha game on a technical, and curable, disclosure of information that is of no use in evaluating price or product acceptability, therefore does not affect the competitive standing the prejudice of the other bidders.
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INDEX OF PERTINENT DECISIONS and AUTHORITIES* CITED
* Only recent (since 1997) Maryland State of Board of Contract Appeal (MSBCA) decisions are available online, so older MSBCA cases cited in the text have not been included in this Index. The author has the printed volumes of the MSBCA decisions up to the year 2010, and any person desperately needing access to the full decision is invited to contact the author to review it.
Appeal of Island Business Systems & Supplies (v NMC), CNMI OPA, Appeal No. BP-A057, Decision on Request for Reconsideration dated March 11, 2009. . . . . . . . . . . . . . . . 173, 180, 333 Arbaugh v. Y & H Corp., 546 U.S. 500 (2006). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 227 Carlson v. Perez, 2007 Guam 6. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 313, 318 Castino v. G.C. Corp., 2010 Guam 03. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 228, 234 Competitive Negotiation, [cited as Nash, Cibinic and OBrien] Second Edition, Ralph C. Nash, Jr., John Cibinic, Jr., and Karen R. OBrien, The George Washington University, Law School Government Contracts Program. . . . . . . . . . . . . . . . . . . . . . . . . . . 21, 95, 102, 105, 114, 129, 135 Core Tech. Int'l Corp. v. Hanil Eng'g & Constr. Co., 2010 Guam 13. . . . . . . . . . . . . . . . . . . . . 234 Curbing Corruption in Public Procurement in Asia and the Pacific, Asian Development Bank, 2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-12, 14, 37, 39, 68, 79, 87, 110, 154, 179, 225, 226 E-Management Consultants, Inc. vs US, __ Fed. Cl.__, No. 08-680 c. . . . . 213, 215, 217, 218, 220, 221, 270 Executive Order 2000-25, Relative to Obtaining On-Island Professional Consulting, Education and Training Services before Off-Island Professional Consulting, Education and Training Services... . 24, 39 Executive Order 84-21 Relative to the Promulgation of Guam Procurement Regulations No. 001. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 Executive Order 88-6 Relative to Transferring Procurement and Related Activities of the GMHA to the DOA GSA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 Federal Government Construction Contracts, 2nd Ed. [cited as FedGov Construction Contracts], Michael A. Branca, Silberman, Vento, Bastianelli III, Ness, and West, Editors, American Bar
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Association 2010. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8, 98, 105, 107 Fleet Services, Inc. v. Dept. of Administration, 2006 Guam 6. . . . . . . . . . . 67, 112, 117, 143, 331 Formation of Government Contracts, [cited as Cibinic and Nash] Third Edition, John Cibinic, Jr., and Ralph C. Nash, Jr., CCH/ Wolters Kluwer, The George Washington University Law School Government Contracts Program. . . . . . . . . . . . . . . . . 8, 74, 75, 103, 174, 182, 195, 214, 285, 326 Frontier Systems Integrators, LLC, Comptroller General Decisions, B-298872.3, February 28, 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97, 114, 115 GHURA v. Dongbu Insurance Company, Ltd., 2001 Guam 24. . . . . . . . . . . . . . . . . . . . . . . . . 237 Government Contract Law, The Desktop Book for Procurement Professionals, Second Edition, [cited as ABA Contract Deskbook] based on the Contract Attorneys Course of the Judge Advocate Generals School, U.S. Army, Section of Public Contract Law, American Bar Association, Chicago, Ill.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77, 93, 100 Guam Attorney General Legal Memorandum, Legality of Purchasing through Federal GSA Contracts, GSA 07-1084, June 16, 2008. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150, 151 Guam Attorney General Opinion, AG 08-0583, Re: Whether the Government's Consolidated Banking Services are Subject to the Guam Procurement Law, June 25, 2008. . . . . . . . . . . . . . . . 28 Guam Community Improvement Foundation, Inc., vs OPA, Guam Superior Court SP 0247-09, Decision and Order, Arthur R. Barcinas, April 13, 2010.. . . . . . . . . . . . . . 300, 301, 310, 312, 313 Guam Imaging Consultants, Inc., v. Guam Memorial Hospital Authority, 2004 Guam 15 . . 51, 56, 58, 60, 64, 79, 177, 178, 180, 183, 209-211 Guam Shipyard, Comptroller General Decisions, B-311321; B-311321.2, June 9, 2008. . 105, 115, 133, 135 Harbor Centre Guam Co, Ltd vs. Doris Flores Brooks, Public Auditor, Guam Superior Court SP 0226-10 (Decision and Order, Arthur R. Barcinas, November 22, 2010). . . . . . . . . . . . . . 263, 313 Harbor Centre Guam, Ltd v. Doris Flores Brooks, Public Auditor, Superior Court of Guam, SP0226-10 (Decision & Order, Hon. Arthur R. Barcinas, April 26, 2011.). . . . . . . . . . . . . . . . . 263 Holland v. Florida, No. 09-5327, _ S. Ct. _ (2010). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 229 Holmberg v. Armbrecht, 327 U.S. 392 (1946). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 228 In re Department of Agriculture v. CSC (Rojas), Amended Opinion on Rehearing, 2009 Guam 19 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33, 34, 308 In the Appeal of Advance Management, Inc. [vs GPSS], OPA-PA-07-008.. . . . . . . . . . . . . 247, 327
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In the Appeal of ASC Trust Corporation [vs Guam Retirement Fund], OPA-PA-09-010 . . . 118, 127, 338 In the Appeal of Captain, Hutapea and Associates [vs GHURA], OPA-PA-08-009. . . . . . . . . . . 335 In the Appeal of Dick Pacific Construction Company, Ltd. [vs GIAA], OPA-PA-07-007. . . 102, 326 In the Appeal of Emission Technologies, Inc.[vs GPA], OPA-PA-07-002.. . . . . . . . . . . 22, 102, 324 In the Appeal of Eons Enterprises Corp. [vs GCC], OPA-PA-10-003. . . . . . . . . . . . . . 199, 202, 208 In the Appeal of Far East Equipment Company, LLC [vs GSA/PAG], OPA-PA-08-001.. . . . . . . . 255 In the Appeal of Far East Equipment Company, LLC [vs GSA/PAG], OPA-PA-07-010.. . . . . . . . 329 In the Appeal of Far East Equipment Company, LLC [vs PAG], OPA-PA-06-002.. . . . . . . . . . . . 323 In the Appeal of Fleet Services, Inc. [vs GSA], OPA-PA-10-001. . . . . . . . . . . . . . . . . . . . . . 79, 164 In the Appeal of Great West Retirement Services [vs GGRF], OPA-PA-07-006. . . . . . . . . 138, 325 In the Appeal of Guam Cleaning Masters [vs DCA], OPA-PA-09-009.. . . . . . . . . . . . . . . . . . . . 266 In the Appeal of Guam Community Improvement Foundation, Inc. [vs DPW], OPA-PA-09-005 . . 67, 121, 122, 124, 127, 139, 141, 171, 172, 174, 175, 180, 203, 204, 211, 212, 215-219, 242, 336 In the Appeal of Guam Education Financing Foundation, Inc. [vs DPW], OPA-PA-09-007. . . . . 34, 122, 124, 127, 129, 139, 211, 242 In the Appeal of Guam Pacific Enterprises, Inc. [vs GPA], OPA-PA-09-003. . . . 235, 240, 259, 292, 293, 295 In the Appeal of Guam Publications, Inc. [vs GSA], OPA-PA-08-007 . . 46, 96, 104, 157, 164, 178, 181, 203, 210, 222, 273, 275 In the Appeal of J&G Construction [vs GMHA], OPA-PA-07-005.. . . 71, 91, 95, 96, 100-102, 104, 225, 241, 325, 326 In the Appeal of JMI Medical Systems, Inc. [vs GMHA], OPA-PO-07-011. . . . . . . . . . . 70, 93, 330 In the Appeal of JMI-Edison [vs GSA for DPHSS], OPA-PA-11-001.. . . . . . . . . . . . . . . . . . . . . . . 95 In the Appeal of JRN Air Conditioning & Refrigeration, Inc. [vs DOE], OPA-PA-10-008. . . . . . 246 In the Appeal of Latte Treatment Center, Inc. [vs DMHSA], OPA-PA-08-008. . . 15, 100, 107, 180, 197, 244, 253, 268, 331
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In the Appeal of Mega United Corp. [vs GIAA], OPA-PA-09-001. . . . . . . . . . . . . . . . 170, 225, 251 In the Appeal of O&M Energy, S.A. [vs GPA], OPA-PA-08-004.. . . . . . . . . . . 72, 99, 100, 240, 329 In the Appeal of O&M Energy, S.A. [vs. GPA, #2], OPA-PA-09-008. . . . . . . . . . . . . . . . . . . . . . 309 In the Appeal of Oceania Collection Services [vs Dept. Chamorro Affairs], OPA-PA-08-006. . . 118 In the Appeal of Pacific Data Systems, Inc. [vs GMHA], OPA-PA-10-005. . . . . . . . . . . . . . 96, 342 In the Appeal of Pacific Security Alarm, Inc. [vs GMHA], OPA-PA-07-009. . . . . . . . . . . . . 86, 328 In the Appeal of RadioCom [vs GSA/OHS], OPA-PA-06-003. . . . . . . . . . . . . 26, 41, 144, 157, 323 In the Appeal of Teal Pacific LLC [vs GMHA], OPA-PA-08-010. . . . . . . . . . . . . . . . . . . . . 255, 336 In the Appeal of Teal Pacific, LLC [vs GPSS], OPA-PA-09-002. . . . . . . . . . . 24, 225, 234, 255, 336 In the Appeal of Teleguam Holdings, LLC dba GTA Telecom [vs GSA], OPA-PA-10-002. . . 18, 223, 254-256, 339 In the Appeal of the Debarment of Rex International, Inc. [vs GWA], OPA-PA-06-001 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 323 In the Appeal of Town House Dept. Stores, Inc. dba Island Business Systems and Supplies [IBSS vs GSA], OPA-PA-08-012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41, 68, 151, 152, 181, 209 In the Appeal of Town House Dept. Stores, Inc., dba Island Business Systems and Supplies [IBSS vs DOE], OPA-PA-10-010. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31, 248 In the Appeal of Town House Dept. Stores, Inc., dba Island Business Systems and Supplies [IBSS vs GPSS (2)], OPA-PA-08-011. . . . . . . . . . . . . . . . . . . . . . . . . 145, 151, 156, 162, 179, 234, 288, 310 In the Appeal of Town House Dept. Stores, Inc., dba Island Business Systems and Supplies [IBSS vs GPSS (1)], OPA-PA-08-003. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71, 207, 225, 239, 292 In the Appeal of Town House Dept. Stores, Inc., dba Island Business Systems and Supplies [IBSS vs UOG], OPA-PA-06-004 (subsequently re-docketed by OPA as OPA-PA-07-001). . . . . . . . 170, 225 In the Appeal of Z4 Corporation [vs GSA/DOE], OPA-PA-09-012. . . . . . . . . . . . . . . . . . . . 64, 340 In the Matter of L.P. Ganacias Enterprises, Inc., dba Radiocom SP 0049-07 (Decision and Order re: Motion to Dismiss, Michael J. Bordallo, July 13, 2010).. . . . . . . . . . . . . . . . . . . . . . . 313, 314, 318 Irwin v. Department of Veterans Affairs, 498 U.S. 89 (1990). . . . . . . . . . . . . . . . . . . . . . . 229, 238 J&B Modern Tech v. GIAA, Guam Superior Court, CV 0732-06 (Findings of Fact and Conclusions of
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Law, Elizabeth Barrett-Anderson, June 25, 2007). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84, 243 James Weed et al. vs Bachner Company Inc., and Bowers Investment Company, Alaska Supreme Court, Supreme Court No. S-13284, Opinion No. 6475 , May 14, 2010.. . . . . . . . . . . . . . 224, 276 Kings LLC, dba Kings Restaurant v. Alicia G. Limitiaco [as Attorney General], Guam Superior Court, SP 168-09 (Decision and Order re: Motion for Summary Judgment, Michael J. Bordallo, March 25, 2010) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 Kontrick v. Ryan, 540 U.S. 443 (2004). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 238 L.P. Ganacias Enterprises, Inc., dba Radiocom vs. GIAA and Guam Cell Communications, Guam Superior Court, CV 1787-00 (Decision and Order, Joaquin V. E. Manibusan, Jr., November 13, 2000). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69, 70, 93, 156, 181, 182, 196, 210, 241 Menominee Indian Tribe of Wisconsin v. United States of America, No. 09-5005, (D.C. Cir.), July 30, 2010. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 230 Nortel Government Solutions, Inc., v. USA, __ Ct.Cl. __, No. 08-682C .. . . . . . . . . . . . . . . . . . 220 Okada Trucking Co., LTD. v. Board of Water Supply, 40 P.3d 946, 97 Haw. 544 (Haw. App., 2001) [known as Okada Trucking I]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92, 98 Pacific Rock Corporation v. Dept. of Education, [Pacific Rock II], 2001 Guam 21.. . . . . 236, 237, 290, 291, 293, 298, 319, 320 Pacific Rock Corporation v. Dept. of Education, [Pacific Rock I] 2000 Guam 19.. . 231, 236, 237, 290, 317, 319 Pacific Security Alarm, Inc. v DPW, Guam Superior Court CV 0591 - 05 (Decision and Order Denying Motion to Dismiss, Stephen Unpingco, August 14, 2006). . . . . . . . . . 208, 234, 237, 239 Pacific Security Alarm, Inc., v. GPA, Guam Superior Court, CV 1304-04 (Findings of Fact and Conclusions of Law, Arthur R. Barcinas, August 15, 2006). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 328 Petition of Town House Department Stores, Inc., dba Island Business Systems & Supplies [IBSS vs GSA], OPA-PA-09-011. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85, 113, 157, 207 Planetspace Inc. v. USA, __ Ct.Cl. __, No. 09-0099C. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 221 Rhinocorps Ltd Co. v. USA, __ Ct.Cl. __, No. 08-410C.. . . . . . . . . . . . . . . . . . . . . . . . . . . 220, 224 Scarborough v. Principi, 541 U.S. 401 (2004) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 234 Service Contracting: A Local Government Guide [cited as ICMAs Service Contracting], by Donald F. Harney, published by The International City/County Management Association (ICMA), Washington, D.C., 1992. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69, 127, 155, 170
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Southern Foods Group, L.P. v. State, Dept. of Educ., Supreme Court of Hawaii, 89 Hawai'i 443, 974 P.2d 1033 (1999).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94 Sule v. Guam Board of Dental Examiners, 2008 Guam 20. . . . . . . . . . . . . . 242, 256, 301-303, 305 Sumitomo Construction, Co., vs. Government of Guam, 2001 Guam 23. . . . . . . . . . . . . . . . . . 297 Sumitomo Construction, Co., vs. Government of Guam, Guam Superior Court CV 1589-99 (Decision and Order, Michael J. Bordallo, May 18, 2000). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 297 Teleguam Holdings, LLC dba GTA Telecom, vs General Services Agency, BSP and Pacific Data Systems, Guam Superior Court, SP 0050-10 (Decision and Order), Elizabeth Barrett-Anderson, May 6, 2010.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44, 223, 270, 299 TRC Environmental Corporation vs. Office of the Public Auditor, Guam Superior Court SP 160-07 (Decision and Order on Petition for Writ of Mandate, Alberto C. Lamorena III, November 21, 2008) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22, 102, 208, 210, 226, 228, 310, 324 Tumon Corporation vs. Guam Memorial Hospital Authority, Guam Superior Court CV 1420-01 (Decision and Order, Michael J. Bordallo, October 22, 2001). . . . . . . . . . . . . . . . . . . . . . . . . . 171 [Big Ben] Guam Police Department vs Superior Court (Lujan), 2011 Guam 8. . . . . . . . . . 321, 322
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A GUAM PROCUREMENT PROCESS PRIMER

John Thos. Brown

A GUAM PROCUREMENT PROCESS PRIMER

Procurement Lore or Procurement Law ?

Guam Procurement Process Primer Ver 2.1

John Thos. Brown 2011

What is a Responsive Bid?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93

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John Thos. Brown 2011

Architectural, engineering and land surveying vs. construction services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139

SOLE SOURCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143

Guam Procurement Process Primer Ver 2.1

John Thos. Brown 2011

Guam Procurement Process Primer Ver 2.1

John Thos. Brown 2011

THE AUTOMATIC STAY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 209 a. Beware this gap.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 209

Guam Procurement Process Primer Ver 2.1

John Thos. Brown 2011

Guam Procurement Process Primer Ver 2.1

John Thos. Brown 2011

Chronological flow of a simple appeal. . . . . . . . . . . . . . . . . . . . . . . . . . 264

Alternate injunctive action. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 287

Guam Procurement Process Primer Ver 2.1

John Thos. Brown 2011

Appeals (to OPA) from Contract Disputes... . . . . . . . . . . . . . . . . . . . . . 292

Court review of OPA contract dispute decisions . . . . . . . . . . . . . . . . . 319

Guam Procurement Process Primer Ver 2.1

John Thos. Brown 2011

5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18.

INDEX OF PERTINENT DECISIONS and AUTHORITIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 353

Guam Procurement Process Primer Ver 2.1

John Thos. Brown 2011

Procurement Lore or Procurement Law ?

Guam Procurement Process Primer Ver 2.1

Guam Procurement Process Primer Ver 2.1

John Thos. Brown 2011

Guam Procurement Process Primer Ver 2.1

John Thos. Brown 2011

Guam Procurement Process Primer Ver 2.1

Guam Procurement Process Primer Ver 2.1

John Thos. Brown 2011

Guam Procurement Process Primer Ver 2.1

Guam Procurement Process Primer Ver 2.1

Guam Procurement Process Primer Ver 2.1

Guam Procurement Process Primer Ver 2.1

[P]rotecting the integrity of the procurement process is one of the reasons

Guam Procurement Process Primer Ver 2.1

For Non-Government Employees: Any effort to influence any public

Guam Procurement Process Primer Ver 2.1

Guam Procurement Process Primer Ver 2.1

John Thos. Brown 2011

John Thos. Brown 2011

Guam Procurement Process Primer Ver 2.1

John Thos. Brown 2011

The Superior Court is given jurisdiction to hear a complaint by any

Guam Procurement Process Primer Ver 2.1

Guam Procurement Process Primer Ver 2.1

Guam Procurement Process Primer Ver 2.1

Guam Procurement Process Primer Ver 2.1

Guam Procurement Process Primer Ver 2.1

Guam Procurement Process Primer Ver 2.1

Guam Procurement Process Primer Ver 2.1

A governmental body to whom the Guam Procurement Act applies only