DGS’ BEST VALUE PROCUREMENT NOT DONE THE BEST WAY

DGS’ methods of procuring construction contracts found to have violated state statutory requirements.  The Pennsylvania Associated Builders and Contractors (“ABC”) challenged the use of request for proposals (“RFP’s) by Pennsylvania Department of General Services for additions and alterations to the Foster Student Union at Cheyney University.  ABC claimed that seeking RFP’s for construction work violated the Pennsylvania Procurement Code.  While the Court found that the use of the RFP process was allowed, it did find that the methods followed by DGS violated the Pennsylvania Procurement Code.

Prior to 2005, the typical contract bid process was competitive sealed bidding in which the lowest responsible bidder is awarded the contract.  In 2005, DGS issued its “Best Value Policy” which authorized the use of RFP’s to accomplish DGS’ goals of improving upon timely delivery of quality multiple prime construction projects by qualified contractors.  The RFP process should be considered for complex projects with allocations exceeding $5,000,000.  The policy statement also required that DGS’ Deputy Secretary make a written determination that competitive sealed proposal process was either not practicable or not advantageous to the Commonwealth.

Under the RFP procedure a contractor is required to submit a proposal package consisting of three parts.  The first, a cost submission which counted for 60% of the points; a technical submission with specifics spelled out in the RFP counting for 30% of the points; and a disadvantaged business enterprise submission that outlined the MBE, WBE and small disadvantaged business participation of the contractor, which counted for 10% of the points.  The contractor with the highest point score would be awarded the contract.

Since the Court found that the best value policy was a valid policy, so long as the policy was consistent with section 513 of the Procurement Code which allows a contract to be entered into by competitive sealed proposals, then the policy would be upheld.  Section 513 only allows the RFP procedure when the contracting officer determines in writing that the use of competitive sealed bidding is either not practicable or advantageous to the Commonwealth.

The decision of the case turned on what level of particularity is needed when the contracting officer determines, in writing, that the competitive sealed bidding is either not practicable or advantageous.  DGS, in its written determination, stated:

The use of the standard competitive sealed bid process for the renovation of Foster Union would not be advantageous to the Commonwealth.  Competitive sealed proposals are a more practical method of procurement since this will allow Proposers flexibility in developing their proposals to address their experience with this type of work and the ability to complete coordinated construction in a timely manner.  In addition to expediting the process, this method will be more advantageous by allowing the Commonwealth the ability to consider criteria other than cost in the award process.  The prime contracts to be awarded, if any, will be agreed-upon lump sum awards reflecting the costs submitted in the proposals.

Finding that the proposed construction was not unique, that any contractor was always obligated to coordinate its work with other contractors and timely complete its work, the Court found that DGS did not provide enough specificity for finding impracticability or disadvantageous.

It is interesting to note that by the time that the Court rendered its decision, the project had been completed and the Court could afford no relief.  What the case does provide is a warning to DGS that it may not merely select the RFP process because it wants to.  DGS, subject to judicial scrutiny must provide sufficient detailed explanation of the unique factors that justify a divergence from the traditional sealed bidding procurement process.  It is likely that if DGS continues the use of the RFP process that bid protests will become more frequent.