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NYS Forum IT Procurement Workgroup. DOING IT BUSINESS WITH NEW YORK STATE AND NEW YORK CITY GOVERNMENT June 9, 2010. LEGAL AND ETHICAL CONSIDERATIONS IN NYS PROCUREMENT. LEGAL AND ETHICAL CONSIDERATIONS IN NYS PROCUREMENT. AGENDA Procurement Lobbying Law Debriefings Protests Q & A.

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NYS Forum IT Procurement Workgroup

DOING IT BUSINESS WITH NEW YORK STATE AND NEW YORK CITY GOVERNMENT

June 9, 2010

LEGAL AND ETHICAL CONSIDERATIONS IN NYS PROCUREMENT


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LEGAL AND ETHICAL CONSIDERATIONS IN NYS PROCUREMENT

AGENDA

  • Procurement Lobbying Law

  • Debriefings

  • Protests

  • Q & A


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Procurement Lobbying Law

Anne Phillips

Associate Counsel

NYS Office of General Services


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Hypothetical

State Agency X has determined that it needs to procure widgets that should result in energy efficiency savings. It issues a press release announcing that it plans to release a Request For Proposals (RFP) in the next month.

During that month, a potential bidder, the CEO of Company Y, calls the head of the purchasing office at Agency X to inquire whether the RFP will include product specifications for a newer version of widgets that has been on the marketplace for the past year and which is manufactured by Company Y (as well as Companies Z and A).


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The purchasing officer informs the CEO of Company Y that the draft RFP does not contain those specifications. The CEO then forwards information to assist Agency X in reconsidering its design. A month later, Agency X issues the RFP for widgets.

The specifications were revised so that widgets, such as those manufactured by Companies Y, Z and A, can now successfully bid on the RFP.

Potential bidders are advised in the RFP that there will be a conference call scheduled to address any questions they may have.

Hypothetical


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In addition, according to the RFP, a representative of any potential bidder may schedule an interview with the head of purchasing to obtain answers to questions that are not satisfactorily answered on the conference call.

Jeremy B., who works in Agency X’s Finance office, but is unfamiliar with this particular procurement, is named as the designated contact for the widget bid.

State Agency X’s purchasing officer is contacted twice, after the RFP is issued, by the CEO of Company X, who is seeking further information as to how his company can best present its response to meet Agency X’s specifications. The purchasing officer speaks generally with the CEO about the RFP but declines to provide any specific information.

Hypothetical


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Company X is selected by State Agency X as the lowest responsible and responsive bidder on the widget RFP.

Company Y protests that decision to OSC in writing and by phoning the Contract Review Section at OSC.

In reviewing the procurement record from State Agency X, OSC finds no record of any contact by the CEO of Company Y.

Hypothetical


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Questions: responsible and responsive bidder on the widget RFP.

In what ways, if any, does this procurement violate the Procurement Lobbying Law?

What is the remedy for the violation(s)?

Hypothetical


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Procurement Lobbying Law responsible and responsive bidder on the widget RFP.

State Finance Law §§139-j and 139-k (the Law) restricts communications between the business community (offerers) and the government about procurement contracts.

It recognizes there are different kinds of communications.

Communications that are an “attempt to influence” have specific rules (referred to as Contacts).

The Law requires each Governmental Entity to develop a policy on permissible Contacts and to inform Offerers of the policy.

State Finance Law §§ 139-j and 139-k


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State Finance Law §§ 139-j and 139-k responsible and responsive bidder on the widget RFP.

The Law also tells the business community where to direct advocacy efforts.

If an Offerer does not follow the Law, the Contacts are considered “impermissible Contacts”.

Violation of such rules has severe consequences – including public notice of non-responsibility, non-award of contract and debarment.

The Law requires each state agency to conduct a review and investigation about impermissible Contacts.

OGS is responsible for maintaining on the Internet lists of businesses that have violated the Law’s requirements.


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General Rule responsible and responsive bidder on the widget RFP.

Offerer can always contact the Designated Contact.

Offerer cannot Contact other employees or governmental entities once the procurement has begun and until it is concluded (“restricted period”) unless the communication falls within one of the permissible subject matter exemptions (SFL §139-j(3)(a)(1-9)).

State Finance Law §§ 139-j and 139-k


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Do’s responsible and responsive bidder on the widget RFP.

A vendor should try to ascertain the following before talking to an agency.

Determine if there is a Restricted Period.

If there is a Restricted Period, determine who is the Designated Contact for that procurement; and

Direct communications correctly (namely to the Designated Contact).

Be mindful if you have other communications with the agency

State Finance Law §§ 139-j and 139-k


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Do’s responsible and responsive bidder on the widget RFP.

Follow the processes in the solicitation.

Generally, submit all questions be submitted in writing to the Designated Contact listed in the solicitation.

Work with agency on agenda for any meetings that are conducted and stick with the agenda.

Confirm that a record of Contact is to be recorded – even if you are dealing with the Designated Contact.

State Finance Law §§ 139-j and 139-k


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Don’ts responsible and responsive bidder on the widget RFP.

Don’t discuss procurements with other than Designated Contacts in a Restricted Period – it lasts until OSC approves the contract!

Don’t miss opportunities for process improvements.

Formalize information exchanges with State agency.

Follow procurement processes.

State Finance Law §§ 139-j and 139-k


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2010 Amendments to the Procurement Lobbying Law responsible and responsive bidder on the widget RFP.

  • The Law’s restrictions can now apply before the issuance of the bid, request for proposal or other method used for commencing a procurement, where the governmental agency (1) has made a determination of need for a procurement, and (2) communicates such determination in a public manner, such as a public announcement or public communication, to any potential vendor.

  • A new restricted period will apply each time a procurement is amended, extended or renewed, or there is a change order unless the amendment, extension, renewal or change order is authorized and payable under the terms of the underlying contract as it was finally awarded or approved.


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2010 Amendments to the Procurement Lobbying Law responsible and responsive bidder on the widget RFP.

  • The definition of an “offerer” has been clarified so that a person or entity is subject to the Law even if he, she or it does not have a financial interest in the procurement.

  • A governmental agency that contacts a procuring agency as part of its oversight responsibilities is not subject to the Law.

  • Persons selected as designated contacts must be knowledgeable about the procurement.


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2010 Amendments to the Procurement Lobbying Law responsible and responsive bidder on the widget RFP.

  • The types of contacts that are permissible now expressly include:

    • participation in a demonstration or other means for exchange of information in a setting open to all potential bidders provided for in a request for proposals”;

    • presenting oral protests, appeals or complaints to OSC;

    • providing information to offerers “regarding the status of the review, oversight, or approval of a governmental procurement that has been submitted to or is under review by that governmental entity”; and

    • “communications between offerers and governmental entities that solely address the determination of responsibility by a governmental entity of an offerer.”


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2010 Amendments to the Procurement Lobbying Law responsible and responsive bidder on the widget RFP.

  • Any communications that are considered within the Law’s listing of permissible subject matter contacts do not have to be made to a designated contact.

  • Communications between certain preferred sources and governmental entities are permissible unless they constitute an attempt to influence the governmental entity during a restricted period.

  • The written affirmation that an offerer signs or otherwise acknowledges signifying that he or she understands and agrees to comply with the governmental entity’s procurement lobbying procedures, is deemed to apply to any amendments to the procurement.


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Guidance developed by the Advisory Council on Procurement Lobbying, model forms and language and other materials, are present on the internet at

http://www.ogs.state.ny.us/aboutOgs/regulations/defaultAdvisoryCouncil.html

Access through OGSNow “Procurement Lobbying” at http://ogsnow/ogspolicy/viewpolicy.asp?policyID=169

Access through the public web site under “About OGS” at http://www.ogs.state.ny.us/aboutOgs/regulations/defaultSFL_139j-k.html

Business Unit specific policies

Resources


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State Agency X has determined that it needs to procure widgets that should result in energy efficiency savings. It issues a press release announcing that it plans to release a Request For Proposals (RFP) in the next month.

During that month, a potential bidder, the CEO of Company Y, calls the head of the purchasing office at Agency X to inquire whether the RFP will include product specifications for a newer version of widgets that has been on the marketplace for the past year and which is manufactured by Company Y (as well as Companies Z and A).

Hypothetical


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The purchasing officer informs the CEO of Company Y that the draft RFP does not contain those specifications. The CEO then forwards information to assist Agency X in reconsidering its design. A month later, Agency X issues the RFP for widgets.

The specifications were revised so that widgets, such as those manufactured by Companies Y, Z and A, can now successfully bid on the RFP.

Potential bidders are advised in the RFP that there will be a conference call scheduled to address any questions they may have.

Hypothetical


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In addition, according to the RFP, a representative of any potential bidder may schedule an interview with the head of purchasing to obtain answers to questions that are not satisfactorily answered on the conference call.

Jeremy B., who works in Agency X’s Finance office, but is unfamiliar with this particular procurement, is named as the designated contact for the widget bid.

State Agency X’s purchasing officer is contacted twice, after the RFP is issued, by the CEO of Company X, who is seeking further information as to how his company can best present its response to meet Agency X’s specifications. The purchasing officer speaks generally with the CEO about the RFP but declines to provide any specific information.

Hypothetical


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Company X is selected by State Agency X as the lowest responsible and responsive bidder on the widget RFP.

Company Y protests that decision to OSC in writing and by phoning the Contract Review Section at OSC.

In reviewing the procurement record from State Agency X, OSC finds no record of any contact by the CEO of Company Y.

Hypothetical


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Questions responsible and responsive bidder on the widget RFP.

In what ways, if any, does this procurement violate the Procurement Lobbying Law?

What is the remedy for the violation(s)?

Hypothetical


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Questions responsible and responsive bidder on the widget RFP.

25


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Debriefings responsible and responsive bidder on the widget RFP. State Finance Law Section 163 (9) (c)

Vanessa Saiid

Attorney Trainee

NYS Office of the State Comptroller


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Good Debriefings responsible and responsive bidder on the widget RFP.

Transparency

More Viable Competition

Better New York State Contracts


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Debriefings & American Idol responsible and responsive bidder on the widget RFP.

American

Idol


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State Finance Law responsible and responsive bidder on the widget RFP. § 163 (9) (c)

  • Prior to it’s amendment in 2008, SFL 163 (9) (c) was very ambiguous and there was no express, statutory requirement that debriefings be provided.

  • The amendment to the law added an express requirement that an agency provide a debriefing to any unsuccessful offeror who requests one.


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SFL responsible and responsive bidder on the widget RFP. § 163 (9) (c) Requirements

  • Notice of the opportunity for a debriefing must be provided in the solicitation documents.

  • Reasonable time to request a debriefing must be given.

  • Upon request by offeror, agencies must provide a debriefing.


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What May Be Disclosed in the Debriefing responsible and responsive bidder on the widget RFP.

  • Weaknesses of the proposal submitted by the vendor being debriefed?

  • Strengths of the winning vendor’s proposal?

  • Strengths and/or weaknesses of other competitors proposals?

  • All of the above?


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What May Be Disclosed in the Debriefing responsible and responsive bidder on the widget RFP.

  • SFL § 163 (9) (c) specifically requires agencies to disclose the “…reasons that the proposal…by the unsuccessful offeror was not selected for award.”

  • Clearly, the debriefing must address the deficiencies of the proposal submitted by the vendor being debriefed.

  • The law does not specifically mandate nor prohibit an agency from disclosing information on the successful proposal. Because of this, agency practices differ widely concerning the disclosure of information during debriefings.


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3 Different Agency Approaches to Conducting Debriefings responsible and responsive bidder on the widget RFP.

  • Full Disclosure: specify why the winning proposal was determined to be better than the proposal submitted by the vendor being debriefed/give a comparative analysis.

  • Minimum Disclosure: no disclosure of information on the successful proposal, focusing rather on the strengths and weaknesses of the debriefed parties proposal only.

  • Middle Ground: provide scores and limited information concerning the winning proposal.


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Do’s in the Procurement Process responsible and responsive bidder on the widget RFP.

  • DO – Ask questions before submitting the proposal.

  • DO – Understand what is being asked for in the solicitation and be responsive.

  • DO – Provide the agency with questions prior to the debriefing.

  • DO – Come to the debriefing prepared.

  • DO – Take advantage of the debriefing.


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Questions responsible and responsive bidder on the widget RFP.

35


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PROTESTS responsible and responsive bidder on the widget RFP.

John Dalton

Associate Counsel

NYS Office of the State Comptroller


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AGENDA responsible and responsive bidder on the widget RFP.

OSC Bid Protest Procedures

Dos and Don’ts in the Protest Process

Frequent Issues Raised In Procurement Protests

Questions and Answers/Discussion

PROTESTS


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OSC BID PROTEST responsible and responsive bidder on the widget RFP.

PROCEDURES

PROTESTS


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Authority to Hear Protests responsible and responsive bidder on the widget RFP.

Pursuant to Section 112 of the State Finance Law, most State agency contracts require the Comptroller’s approval

Expenditure contracts over $50,000

Revenue contracts over $10,000

In reviewing contracts, the Comptroller reviews both the legal and business bases for contract awards

As part of the Comptroller’s review of contracts, OSC will consider protests by interested parties and has promulgated procedures governing such protests.


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How Protests Come to OSC responsible and responsive bidder on the widget RFP.

  • Part of Procurement Record

  • Appeal of Agency Determination Filed with OSC

  • Initial Protest Filed with OSC


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Applicability responsible and responsive bidder on the widget RFP.

Procedures apply to all contracts submitted to OSC for approval

Section 112 of the State Finance Law

Contracts voluntarily submitted to OSC for Approval (e.g., Thruway Authority contracts)


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Definitions responsible and responsive bidder on the widget RFP.

Generally, they are consistent with the definitions contained in Section 163 of the State Finance Law

However, two are worthy of note:

Interested party - “A participant in the procurement process and those whose participation in the procurement process has been foreclosed by the actions of the contracting agency.”

Provides for broad scope of parties that could have standing to bring a protest.

Contract award - “A written determination from a contracting agency to an offerer indicating that the contracting agency has accepted its bid or offer.”

Note, an interested party may file a protest with OSC after the contracting agency has made a “contract award” and need not wait for a final contract to be signed to initiate a protest

Pursuant to the Procurement Lobbying Law (see State Finance Law §139-j), a protest can only be made to OSC during the process of contract approval


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Initial Protest Filed with OSC responsible and responsive bidder on the widget RFP.

If the contracting state agency has a protest procedure, and provides notice of its procedure, initial protest should be filed with state agency

If not, an “interested party” may file initial protest with OSC


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Filing Initial Protest with OSC responsible and responsive bidder on the widget RFP.

Protest must be in writing and filed with the OSC Bureau of Contracts

If provided with notice of the contract award, protest must be filed within 10 days of such notice

If no notice was provided, protest may be filed anytime after award and prior to Bureau of Contract’s action on the contract

Protesting party must simultaneously file notice of protest with contracting state agency and successful bidder


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Filing Initial Protest with OSC responsible and responsive bidder on the widget RFP.

Contracting agency may file an answer to protest with the delivery of the contract to OSC or 7 days after filing of the protest, whichever is later

A copy of the answer must be simultaneously delivered to protestor and successful bidder

The successful bidder may also file an answer to the protest, within the same time frame

The protestor may file a reply to the answer(s), within 3 days of the filing of the answer(s)

Reply should only respond to the answer and should not raise new issues


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Appeal of Agency Determination responsible and responsive bidder on the widget RFP.

Upon receipt of contracting agency’s determination, interested party has 10 days to file an appeal with the OSC Bureau of Contracts

A copy of the appeal must be filed with contracting agency, successful bidder and any other participant in the protest process.

Appeal must set forth basis on which it challenges contracting agency’s determination


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Appeal of Agency Determination responsible and responsive bidder on the widget RFP.

Contracting agency may file an answer to appeal with the delivery of contract to OSC or 7 days after the filing of protest, whichever is later

Contracting agency must copy protestor and successful bidder on answer

Successful bidder may also file an answer within the same time frame, and must copy contracting agency and protestor


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OSC Bureau of Contracts Determination responsible and responsive bidder on the widget RFP.

General Authority of BOC in Protest Process:

May, on written notice to parties, act on an expedited basis

May summarily deny the protest

May require further information concerning the procurement

May conduct a fact finding hearing (formal or informal)

A recent amendment to the Procurement Lobbying Law makes this easier


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OSC Bureau of Contracts Determination responsible and responsive bidder on the widget RFP.

  • Bureau of Contracts will issue a written determination of the appeal

  • Determination will address all issues raised by protest, as well as issues identified in Bureau’s review of procurement

  • All interested parties will be provided with a copy of the determination

  • Bureau of Contracts’ determination will either:

    • Deny the protest and approve the contract

    • Uphold the protest and require a new procurement (where procurement itself was flawed)

    • Uphold the protest but leave to agency decision of whether to make a new award (consistent with OSC determination) or conduct a new procurement

    • Indicate that the protest is moot because of other fatal flaws in the procurement found as part of OSC’s review of the contract


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General Information responsible and responsive bidder on the widget RFP.

Link to OSC G-Bulletin 232

“OSC Contract Award Protest Procedures”

http://www.osc.state.ny.us/agencies/gbull/g_232.htm


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Do’ responsible and responsive bidder on the widget RFP. s & Don’ts For Participating in Protests

  • Do’s For Protesters:

    • Be Specific

    • Fully and clearly state the legal and factual grounds for the protest, the relief requested and include all relevant documentation


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Do responsible and responsive bidder on the widget RFP. s & Don’ts For Participating in Protests

  • Don’ts For Protesters

    • Be vague or conclusory - “My proposal was better and I should have won.”

    • This rarely succeeds since OSC generally gives deference to agency determinations regarding the merits of the proposals submitted


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Do responsible and responsive bidder on the widget RFP. s & Don’ts For Participating in Protests

  • Dos for Winning Bidders:

    • Carefully respond to issues raised in protest, particularly where assertions relate to winning bidder or its proposal

  • Don’ts for Winning Bidders:

    • Assume there is no need to reply

    • Assume OSC will deny the protest

    • Assume the agency will provide a sufficient response


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Legal Representation in Protests responsible and responsive bidder on the widget RFP.

  • Do I need to hire a lawyer to succeed on a bid protest?

  • No. Many protests filed with OSC are not filed by lawyers, particularly where the issues raised are strictly technical or business in nature

  • However, since the protest process is always adversarial, a lawyer may prove helpful and is certainly advisable where legal issues are involved


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Frequent Issues Raised in Bid Protests responsible and responsive bidder on the widget RFP.

  • Winning bidder did not meet mandatory/minimum specifications

  • Must be proven by protesting party with specific documentation

  • SFL 163(10) requires that contracts shall be awarded to a responsive and responsible offerer

  • “Responsive” means a bidder meeting the minimum specifications in the solicitation


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Frequent Issues Raised in Bid Protests responsible and responsive bidder on the widget RFP.

Waiving Technicalities, Deviations or Omissions

  • A procuring agency:

    • may decline bids that fail to comply with the literal requirements of the specifications; or

    • may waive a technical noncompliance with the bid specifications if the deviation is minor or not substantial; but

    • must reject a bid if the non-compliance is material or substantial.


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Frequent Issues Raised in Bid Protests responsible and responsive bidder on the widget RFP.

Waiving Technicalities, Deviations or Omissions

  • Agencies should always do a review of their RFP to identify every “must” “shall” and “will” and then ask whether they really want to make that specification mandatory and, therefore, non-waivable.

  • Entering into a contract that materially varies from the bid specifications, in favor of the successful bidder, would have the effect of altering the specifications after the bidding process and would give the successful bidder an unfair advantage over other bidders and those who chose not to bid.


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Frequent Issues Raised in Bid Protests responsible and responsive bidder on the widget RFP.

Waiving Technicalities, Deviations or Omissions

A variance is material or substantial when it would:

  • impair the interests of the procuring agency,

  • place the successful bidder in a position of unfair economic advantage, or

  • place other bidders or potential bidders at a competitive disadvantage.


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Frequent Issues Raised in Bid Protests responsible and responsive bidder on the widget RFP.

The evaluation methodology was not established in advance of the initial receipt of offers, or was not followed as described in the procurement record

  • SFL 163(7) requires agencies to document, in the procurement record and in advance of the initial receipt of offers, the evaluation criteria and the process to be used in the determination of best value

  • While not explicitly stated, OSC interprets this statute to implicitly require agencies to also follow the previously established evaluation methodology during its selection process


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Frequent Issues Raised in Bid Protests responsible and responsive bidder on the widget RFP.

The Agency failed to establish within its evaluation methodology relative weights for technical and cost

  • SFL 163(9)(b) requires agencies to describe in the solicitation the general manner in which the evaluation and selection shall be conducted and, where appropriate, the relative weight of cost and technical criterion to be considered by a state agency in its determination of best value

  • This must therefore also be done in advance of the agency’s receipt of offers


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Frequent Issues Raised in Bid Protests responsible and responsive bidder on the widget RFP.

The evaluation methodology itself was flawed

  • SFL 163(3) requires agencies to award contracts for commodities on the basis of low cost

  • SFL 163(4) requires agencies to award contracts for services (including technology) on the basis of best value

    • Best Value = A Cost/Benefit Analysis

    • Therefore, service and technology contracts generally require an award that considers both cost and technical merit

    • However, an agency may award solely on the basis of low cost where, for practical purposes, low cost actually = Best Value

    • For example, where 1) The service/technology is routine, or 2) the technical specifications were narrowly prescribed


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Frequent Issues Raised in Bid Protests responsible and responsive bidder on the widget RFP.

“My proposal was better and I should have won.”

  • As noted above, vague and conclusory assertions such as this rarely succeed since OSC review generally focuses on whether methodology established by the agency is reasonable, appropriate and in compliance with applicable legal requirements

    • Typically OSC does not overturn the actual scoring, particularly where it is within the expertise of the procuring agency

    • But there are exceptions:

      • For example, where the argument can be verified with objective data and the agency’s choice was egregiously incorrect or obviously wrong

  • Protests are more likely to be successful when based on a flaw in the evaluation process itself or in the construction of the solicitation


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    Questions responsible and responsive bidder on the widget RFP.


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    For questions involving any of the presented topics, you may contact us at:

    OSC Legal Services

    (518) 474-6011

    Or email: jdalton@osc.state.ny.us