DEFERENCE GIVEN TO PROCURING PUBLIC AGENCY REGARDING MATERIAL DEVIATION

Posted on February 16, 2019April 24, 2020 by Edward Garber

Deference will be given to a procuring public agency in a bid protest, particularly when the issue involves whether a bid is non-responsive and constitutes a material deviation from the solicitation. You do not believe me? Perhaps you will after this holding in Biscayne Marine Partners, LLC v. City of Miami, Florida, 44 Fla.L.Weekly D467a (Fla. 3d DCA 2019):

Consequently, no principle of law is clearly established…as to any obligation of the trial court (and, by analogy, an administrative hearing officer) [in a bid protest] to decide or to defer [whether a bid constitutes a material deviation from the solicitation]. If anything, the existing and clearly established principle of law inclines toward judicial deference in public agency competitive bidding disputes when the agency has exercised it discretion absent illegality, fraud, oppression or misconduct.

I do not know about you, but that last underlined sentence is pretty strong language regarding judicial deference!

In this case, Miami (the procuring public agency) issued a Request for Proposals (RFP) for the redevelopment and lease of waterfront property, for the operation of a marina, boatyard, restaurant, wet slips, and a dry storage facility on the property. Miami issued five addenda to the RFP. There were three bidders.

On a boundary survey attached to the RFP applicable to the redevelopment, there was a rectangular location designated “Not a Part.” All three bidders made some use of the location designated “Not a Part” in their proposals. Apparently, there was nothing specific as to what this “Not a Part” meant; it could have reasonably meant it was not included in the boundary survey or it could have reasonably meant it was not to be included for purposes of redevelopment.

Miami issued a recommendation to the top-ranked proposer based on rankings from its evaluation committee. Another proposer filed a bid protest claiming that the top-ranked proposal should be deemed non-responsive since it proposed a redevelopment outside of the property’s defined boundaries by utilizing the location defined as “Not a Part.” The protester claimed this constituted a material deviation from Miami’s RFP (solicitation).

I will be the first to tell you that this is confusing since all of the proposers including the protester made some use of the location defined as “Not a Part.”

Notwithstanding, the protest proceeded to a hearing officer pursuant to Miami’s bid protest procedures and the hearing officer claimed that even if the “Not a Part’ location in the boundary survey meant it was not allowed to be considered for the redevelopment, “the City had the ability to determine whether that made a difference to the outcome and whether the deviation was material.” The hearing officer, in denying the protest, further accepted Miami’s interpretation that nothing in the RFP prohibited the use of the “Not a Part” location for redevelopment purposes.

The protester then filed a petition for writ of certiorari to the appellate division of Miami-Dade’s Circuit Court. The protester’s writ was denied, with the appellate division giving deference to Miami’s interpretation of “Not a Part” in the boundary survey.

The protester then filed a second-tier petition of writ of certiorari to the Third District Court of Appeal. The protester’s main argument was that neither the hearing officer nor the appellate division should have given deference to Miami. Rather, they needed to conduct their own independent determination of the issue and whether the top-ranked proposal constituted a material deviation from the RFP.

However, the Third District held that what the protestor wanted from an “independent determination” standpoint was not the law. There is no law that precludes a hearing officer or appellate body in a bid protest from deferring to the procuring public agency as to whether a proposal (or bid) constitutes a material deviation from the solicitation and is, therefore, non-responsive. To the contrary, the law would be inclined to support “judicial deference in public agency competitive bidding disputes when the agency has exercised its discretion absent illegality, fraud, oppression or misconduct.” Biscayne Marine Partners, supra.

As I mentioned above, this is pretty strong language regarding deference given to a procuring public agency. Therefore, pick your fights wisely!

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

KNOW YOUR BID PROTEST RIGHTS

Posted on October 7, 2014November 8, 2024 by Edward Garber

If you are a contractor that works on Florida public construction projects, then you understand that public projects are competitively solicited through a procurement method such as an invitation to bid, a request for proposals, or invitation to negotiate. Irrespective of the procurement method, a disappointed bidder (a bidder that was not awarded the contract for the project) may look to protest the award of the contract. Typically, the disappointed bidder is the second lowest bidder or a bidder that was deemed non-responsive or non-responsible by the public agency. The argument is that (a) but for the award of the contract to the awardee (which the public agency should have deemed a non-responsive or non-responsible bidder), the contract would be awarded to the disappointed bidder or (b) but for the disappointed bidder being deemed improperly non-responsive or non-responsible, the contract would be awarded to it. Regardless of the argument, the disappointed bidder must be responsive to the solicitation and be in a position to actually be awarded the contract; otherwise, its protest will be for naught as it will not have standing to bring the protest in that it will not be deemed adversely affected by the agency’s decision.

Bid protests for Florida state agencies are governed under the Administrative Procedures Act: Florida Statute s. 120.57(3). This statutory section should be set forth in the solicitation and the public agency’s notice of intent to award the contract. (Local public agencies may have their own bid protest procedures in their local codes or ordinances that describe the procedure to protest the award of a solicitation. The code or ordinance section governing the bid protest procedure will be in the solicitation and/or the notice of intent to award the contract for the project.)

Regarding bid protests governed under Florida Statute s. 120.57(3) for construction projects solicited by Florida state agencies, here are bullet points to remember:

The agency will post its notice of intended decision concerning the solicitation- this will usually be the notice that the agency is awarding the contract to a particular bidder.

A contractor adversely affected by the agency’s decision (i.e., the disappointed bidder) must file a notice of protest within 72 hours after the agency posts its notice of intended decision (exclusive of Saturdays, Sundays, and state holidays). Failure to timely file this notice of protest will constitute a waiver of the disappointed bidder’s right to protest.

The disappointed bidder must then file its formal bid protest petition within 10 days after its notice of protest is filed. This formal petition states the disappointed bidder’s factual and legal basis supporting its protest. Failure to timely file this formal petition will constitute a waiver of the disappointed bidder’s right to protest.

When the agency timely receives both the notice of protest and formal protest petition, it must stop the contract award process (meaning it cannot execute any contract) until the protest gets resolved (absent circumstances to avoid immediate and serious danger to the public).

Within 7 days of the timely petition to protest (exclusive of Saturdays, Sundays, and state holidays), the agency shall provide an opportunity to resolve the protest by mutual agreement. If the protest does not get resolved, the agency needs to determine whether there are disputed issues of material fact.

If there is NO disputed issue of material fact, an informal proceeding shall occur within the agency where the agency will enter a decision regarding the bid protest.

If there is a disputed issue of material fact, the agency must refer the protest to Florida’s Division of Administrative Hearings (referred to as DOAH) for a formal proceeding; a bid protest hearing will then be conducted in front of an administrative law judge. The administrative law judge will enter a recommended order regarding the bid protest that the parties will be able to take written exceptions to. The agency will then enter a final order regarding the protest (which oftentimes is aligned with the administrative law judge’s recommended order).

There are numerous nuances regarding bid protests inclusive of arguments forming the basis of the protest so it is important to know your rights, whether submitting a bid on a Florida state public project or a local government public project. Once bid opening occurs or there is an indication as to who the public agency will award the contract to, the disappointed bidder should serve a public records request (ideally, in person or by e-mail) to get an immediate copy of the anticipated contract awardee’s bid / proposal and, if applicable, any committee notes surrounding the award. This way the disappointed bidder can see whether there is any legitimate protest basis.

THE DIFFICULTY IN PREVAILING IN A BID PROTEST

Posted on August 14, 2011November 8, 2024 by Edward Garber

The difficulty in prevailing in a bid protest is illustrated in the non-construction case of Charlotte County v. Grant Medical Transportation, Inc., 36 Fla. L. Weekly D173a (2d DCA 2011). In this case, Charlotte County solicited bids to provide the County with bus drivers and washers for a transit program for disabled persons. An unsuccessful bidder sued the County arguing that the winning bidder’s bid was nonresponsive because it failed to comply with requirements of the solicitation. In particular, the unsuccessful bidder argued that the bid solicitation required all bidders to acknowledge receipt of any addenda to the bidding documents prior to the close of the bids, i.e., bid opening, and the winning bidder failed to comply with this requirement making its bid nonresponsive. (A bid is nonrespnsive if it materially fails to comply with the solicitation. While minor irregularities can be waived by the public entity, material irregularities cannot in that they impact the integrity of the public procurement process which requires all bidders to be on an equal playing field.) After the bid opening, the County required the winning bidder to confirm its receipt of all addenda to the bid documents. (Notably, material portions of a bid should never be able to be changed after bid opening.)

The unsuccessful bidder moved for a temporary injunction preventing the County from awarding the contract at-issue to the winning bidder. The trial court granted the temporary injunction and the County appealed. At the time the trial court granted the injunction, the County had already contracted with the winning bidder and services had been provided in accordance with the contract.

The Second District relied on the following standard for granting injunctive relief:

“To obtain temporary injunctive relief, the movant must satisfy each of the following elements: (1) the movant has a clear legal right to the requested relief or, in other words, it has a substantial likelihood of success on the merits; (2) the movant will suffer irreparable harm if the trial court refuses to grant the injunction; (3) the movant does not have available another adequate remedy at law; and (4) a public interest will be served by the imposition of the injunction.” Grant Medical citing Snibbe v. Napoleonic Soc’y of Am., Inc., 682 So.2d 568, 570 (Fla. 2d DCA 1996).

The Second District reversed the granting of the temporary injunction primarily because the unsuccessful bidder offered no evidence at the noticed and contested hearing (to determine whether an injunction should be entered) to support any of the above-mentioned elements. Although the Second District noted that the winning bidder failed to confirm its receipt of all addenda prior to bid opening, at the injunction hearing, the Senior Division Manager of the County’s Purchasing Department testified that the winning bidder’s failure to confirm receipt was simply a minor deficiency or irregularity. The Second District also noted that at the time the trial court entered the injunction, the contract between the County and the winning bidder had been finalized, with services starting to be performed pursuant to the contract.

It is exceedingly difficult to satisfy each of the above-mentioned elements for the entry of a temporary injunction, especially in the bid protest arena. This case exemplifies the uphill battle an unsuccessful bidder has to prevent the public entity from awarding the contract to the winning bidder.

First, when a public entity waives a known irregularity with a winning bidder’s bid, it will always claim the irregularity is minor and, thus, waiveable at their discretion. This is the reason the County offered testimony at the injunction hearing to basically acknowledge the deficiency with the winning bidder’s bid but to say “it was not big deal.” Well, if it was not a big deal, then why did the County require the winning bidder to confirm receipt of the addenda AFTER bid opening? From a logical standpoint, it would seem that if it is important enough for the County to require that the winning bidder confirm in writing that it received all addenda to the solicitation after the bids were already opened and they knew who the winning bidder was, then it was a material component of the bid solicitation.

Second, unless something totally egregious transpires during the solicitation process, how can a unsuccessful bidder truly establish each and every element to the entry of injunctive relief at what is ultimately an early stage in the lawsuit when discovery should be ongoing? In other words, unless the movant can establish a substantial likelihood of success on the merits or a public interest will be served by the imposition of the injunction, an injunction should not be entered. In Grant Medical, the trial court actually granted the injunction, but the Second District found reasons to reverse the entry of the injunction.

Finally, if the movant does not act quickly in getting the hearing on a temporary injunction, which should mean little discovery, if any, has been conducted, then the movant risks the public body finalizing and entering into the contract with the winning bidder and the winning bidder starting to perform services pursuant to the contract. A no-win situation for an unsuccessful bidder.

While unsuccessful bidders should certainly explore the possibility of protesting, it is important to consider the uphill battle that will be encountered. If the trial court will consider having a hearing and entering injunctive relief in a an ex parte (and, thus, uncontested hearing), that should be explored to avoid the undesirable situation of the contract being entered and services performed by the winning bidder. For this to take place, legal arguments and factual arguments need to be well framed to establish entitlement to the entry of injunctive relief. If a noticed and contested hearing is required, legal and factual arguments still need to be very well framed, but it is important to offer evidence at the hearing. Specifically, if your protest is based on the argument that the winning bidder’s bid was nonrespnsive, you need to know that the public body will argue that the deficiency was minor so that you are prepared to rebut this argument in order to establish a substantial likelihood of success on the merits. You should also offer evidence to show that the deviation is material in that it affects the public interest by detrimentally impacting the competitive procurement process (i.e., it would affect some material component of your bid such as price or scope, etc.).

PERSPECTIVES ON THE COMPETITIVE (OR NOT SO COMPETITIVE) PUBLIC PROCUREMENT PROCESS

Posted on June 25, 2011November 8, 2024 by Edward Garber

In most circumstances, public entities are required to competitively bid the construction of their projects. Sometimes, competitive bidding is as simple as the public entity publishing an Invitation To Bid (“ITB”) seeking to solicit the lowest, responsible, and responsive bidder. In this solicitation, assuming the bidder is responsible (qualified) and responsive (complies with the invitation to bid in all material respects), the public entity is seeking the lowest cost to perform the construction. The ITB process is commonly referred to as the hard bid process because the public entity knows exactly what it wants and seeks the lowest cost to construct per the plans and specifications.

However, seeking an ITB is not the only way a public entity selects a contractor to construct its project. Another common method is the public entity publishing a Request For Proposals ( “RFP”) whereby cost is a factor, but not the only factor in selecting the contractor. A RFP is typically the solicitation when the public entity wants to utilize the experience and sophistication of the contractor to help it determine what specifically it wants. In other words, the public entity wants to resolve a problem and relies on the contractor to submit proposals with the solution and the costs to implement the solution. The public entity then ranks the proposals based on scoring criteria and selects the contractor that has the preferred or highest ranking.

Contractors that participate in the public procurement process, whether through the ITB, RFP, or another approved method of procurement, can often feel frustrated with the process based on the wide latitude and discretion that are afforded to public entities in the process. This frustration is exemplified in Pensacola Builders, Inc. v. King, 36 Fla. L. Weekly D1304c (1st DCA 2011), which involved a 13 year old dispute over a public project that was not awarded to the plaintiff contractor. In this case, a public entity was soliciting a contractor to build and operate a concession stand on a pier through the RFP process. The plaintiff was the highest ranked contractor in the process and was in the process of negotiating the contract with the public entity. However, the defendant contractor that also participated in the RFP process wrote letters to the public entity threatening litigation (after apparently missing the deadline to file a bid protest) regarding the manner in which the public entity conducted the RFP. Due to the public entities apparent fear of the threatened litigation, it ceased negotiations with its highest ranked contractor, readvertised for proposals, and then ranked the defendant as its preferred contractor. This naturally was perceived as an injustice to the plaintiff.

The plaintiff filed suit against the public entity for breach of an implied covenant of fair dealing based on the public entity readvertising the proposals and selecting the defendant contractor as its preferred contractor. See Santa Rosa Island Authority v. Pensacola Beach Pier, Inc., 834 So.2d 261 (Fla. 1st DCA 2002). The plaintiff’s objective was to force the public entity to reengage in contract negotiations with it. The First District Court of Appeal shot down plaintiff’s lawsuit and objective holding, “Absent evidence of illegality, fraud, oppression, or misconduct, Appellee [plaintiff] is without a remedy for Authority’s [public entity] readvertising for proposals and rearranging the preference order of the parties.” Santa Rosa Island Authority, 834 So.2d at 263. Stated simpler, the plaintiff was out of luck as it is hard to establish the government committed a wrong, even though the public entity readvertised proposals due to threatened litigation from a bidder that apparently failed to timely protest!

The plaintiff, however, did not end its pursuit of seeking redress for what it perceived as injustice in the competitive bidding process. The plaintiff creatively asserted claims against the defendant contractor for, among other things, tortious interference with a business relationship and defamation. The plaintiff’s arguments were premised on letters that the defendant sent to the public entity when plaintiff was in the process of negotiating its contract threatening litigation due to the illegality of the RFP process and accusing plaintiff of certain illegal actions. The trial court ruled in favor of defendant on plaintiff’s claims and, unfortunately, because plaintiff did not properly preserve these issues on appeal, the First District Court of Appeal was not in a position to reverse the trial court’s ruling. (Notably, this case demonstrates the importance of preserving all issues and arguments for appeal.) However, had plaintiff preserved these issues for appeal, there may have likely been meat on the bone as to its arguments against the defendant that ultimately got the public entity not to award the contract to the plaintiff, but, instead, to defendant.

In an economy where private projects are not as booming as they once were and public projects being a main source of revenue for many contractors, bid protests and/or the threat of litigation are measures that are being strongly considered when a perceived injustice occurs in the public procurement process. Although this case did not work out well for the plaintiff, plaintiff’s arguments are still creative and worthy of merit against another bidder in a similar context that overtly hinders a contractor’s efforts in contracting with the public entity.