Guam Procurement Law Primer V1-6

Procurement Lore or Procurement Law ?

A G UAM PROCUREMENT PROCESS PRIMER (Ver 1.6 )

(Both more and less than you will ever want to know)

John Thos. Brown Attorney at Law

Procurement Lore or Procurement Law ? A GUAM PROCUREMENT PROCESS PRIMER (Ver 1.6) 1 (Both more and less than you will ever want to know)

CONTENTS INTRODUCTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 I.

II.

SOURCES of Guam Procurement Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 A.

The Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

B.

The Regulations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

C.

Decisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

D.

Other jurisdictions, experts, authors, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . 4

E.

Lore.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

PURPOSES AND POLICIES of Guam Procurement Law.. . . . . . . . . . . . . . . . . . . . . . . . . . 6 D.

to provide for increased public confidence. . . . . . . . . . . . . . . . . . . . . . . . 6

E.

to ensure the fair and equitable treatment. . . . . . . . . . . . . . . . . . . . . . . . 6 4.

Making and keeping “determinations”.. . . . . . . . . . . . . . . . . . . . . . 6

F.

to provide increased economy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

G.

to foster effective broad-based competition. . . . . . . . . . . . . . . . . . . . . . . 8

H.

to provide safeguards. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

I.

to require public access. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

J.

Policy in favor of planned procurement. . . . . . . . . . . . . . . . . . . . . . . . . . 11

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. This is Ver 1.6, June 25, 2009. The author expects it to be revised periodically as new cases and issues arise. You may contact him to obtain the latest version at [email protected] . Guam Procurement Process Primer Ver 1.6 © John Thos. Brown 2009

Page i

N.

K.

Policy in favor of local procurement. . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

M.

The Procurement Act applies to almost all GovGuam purchases. . . . . . . 14

A word from your author. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 3.

The Guam legislature chose to forego procurement training and education when it adopted the Guam version of the Model Procurement Code. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

III.

IV.

PROCUREMENT ADMINISTRATIVE STRUCTURE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 A.

Centralized Procurement Policy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

B.

Policy Office. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

C.

GSA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

D.

DPW.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

E.

Public Auditor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

F.

Attorney General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

METHODS OF SOURCE SELECTION.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Contract renewals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

V.

“BID BONDING”. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

VI.

COMPETITIVE SEALED BIDDING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 B.

The form is always by Invitation for Bids (IFB).. . . . . . . . . . . . . . . . . . . . . 25

C.

Distribution, notice and “bidding time”. . . . . . . . . . . . . . . . . . . . . . . . . . 25

D.

Withdrawal, cancellation and rejection of all bids. . . . . . . . . . . . . . . . . . 26

E.

Bid “mistakes”.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

award goes to the lowest responsible and responsive bidder. . . . . . . . . . . . . . . . . . . . . . 28 G.

What is a Responsive Bid?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

H.

“Materiality” only concerns “Responsiveness”. . . . . . . . . . . . . . . . . . . . . 30 a.

I.

Matters of bidder prejudice. . . . . . . . . . . . . . . . . . . . . . . 30

What is a Responsible bidder?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 d.

Standards of Responsibility. . . . . . . . . . . . . . . . . . . . . . . 33

h.

Inquiry into determination of responsibility. . . . . . . . . . . 36

i.

The interesting requirement for a writing .. . . . . . . . . . . . 37 (4)

J.

“Qualified Bidder lists”.. . . . . . . . . . . . . . . . . . . . 39

A Note on “All or None” bids: Why not take part of me?. . . . . . . . . . . . . 40

Guam Procurement Process Primer Ver 1.6 © John Thos. Brown 2009

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K. VII.

Wage Determination issues.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

MULTI-STEP SEALED BIDDING.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 D.

The first phase. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 5.

VIII.

Phase two. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

REQUESTS FOR PROPOSALS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 only allowed for “professional services”. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

IX.

UNSOLICITED OFFERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 shall be subjected to the Competitive Sealed Bidding . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

X.

SOLE SOURCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

XI.

SMALL PURCHASE PROCEDURES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

XII.

H.

REQUEST FOR QUOTATION (RFQ). . . . . . . . . . . . . . . . . . . . . . . . . . . . 51

I.

BLANKET PURCHASE AGREEMENTS (BPAs). . . . . . . . . . . . . . . . . . . . . . 51

EMERGENCY PROCUREMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 A.

Requires an existing “threat to public health, welfare, or safety under emergency conditions”.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52

C.

“Emergency procurements shall be made with such competition as is practicable under the circumstances”... . . . . . . . . . . . . . . . . . . . . . . . . . . 53

F. XIII.

LIMITED TO 30 DAY SUPPLY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53

FEDERAL SUPPLY SCHEDULE PURCHASES MUST ADHERE TO SPECIFIED METHODS OF SOURCE SELECTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53

XIV.

SPECIFICATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 A.

SPECIFICATIONS ARE THE BEDROCK OF PROCUREMENT. . . . . . . . . . 55

C.

MINIMUM NEEDS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55

D.

UNDULY RESTRICTIVE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56

F.

NON-PROPRIETARY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56

I.

BRAND NAMES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56

J.

BRAND NAME OR EQUAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57

K.

The Who and How of specification preparation and use.. . . . . . . . . . . . 57

Guam Procurement Process Primer Ver 1.6 © John Thos. Brown 2009

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6. XV.

XVI.

XVII.

Procedures for Development of Specifications. . . . . . . . . . . . . . . 58

VARIOUS CONTRACT TYPES, AND THEIR REQUIREMENTS FOR USE.. . . . . . . . . . . . 60 G.

Policy Regarding Selection of Contract Types. . . . . . . . . . . . . . . . . . . . . . 61

H.

Multi-term contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61

I.

Fixed-Price .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62

J.

Indefinite Quantity.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62

K.

Requirements contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63

L.

Leases. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63

M.

Options to purchase, renew, extend. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63

N.

Multiple Source Contracts.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 1.

An Incremental Award is a variety of Definite Quantity. . . . . . . . 64

2.

A Multiple Award is a variety of Indefinite Quantity. . . . . . . . . . 64

PROCUREMENT PROTESTS.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 B.

ONLY “AGGRIEVED” BIDDERS CAN PROTEST. . . . . . . . . . . . . . . . . . . 65

D.

TIMING FOR PROTEST FILING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 1.

General Rule: 14 days from knowledge of aggrievement... . . . . . 66

4.

POSSIBLE EXCEPTION FOR PRE-BID-OPENING ISSUES:.. . . . . . 66

F.

Request for Reasons for Rejection of Bid. . . . . . . . . . . . . . . . . . . . . . . . . 68

G.

FORMAT OF PROTEST.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70

H.

RESOLUTION OF THE BID PROTEST. . . . . . . . . . . . . . . . . . . . . . . . . . . 71

I.

Requests for Reconsideration of Protest Decision. . . . . . . . . . . . . . . . . . 73

THE AUTOMATIC STAY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73

XVIII. APPEALS OF BID PROTESTS TO THE PUBLIC AUDITOR.. . . . . . . . . . . . . . . . . . . . . . . 75 A.

Prerequisites of Appeal are Protest and Decision. . . . . . . . . . . . . . . . . . . 75

B.

15 Day Filing Deadline. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 1.

C.

Equitable Tolling.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76

Jurisdiction of the Public Auditor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77 5.

OPA jurisdiction does NOT include direct review of Ethical violations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80

D.

OUTLINE OF AN APPEAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80 c. 2.

CAVEAT: This outline is bare bones.. . . . . . . . . . . . . . . . 81

First step, the Notice of Appeal.. . . . . . . . . . . . . . . . . . . . . . . . . . 82

Guam Procurement Process Primer Ver 1.6 © John Thos. Brown 2009

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3.

Second Step, the Procurement Record. . . . . . . . . . . . . . . . . . . . . 83 a.

Within five (5) days from filing the Notice of Appeal. . . . 83

4.

Objections to OPA jurisdiction. . . . . . . . . . . . . . . . . . . . . . . . . . . 84

5.

Third Step, the Agency Report. . . . . . . . . . . . . . . . . . . . . . . . . . . 85 b.

The Agency Report is meant to be filed ten (10) days after receiving the Notice of Appeal. . . . . . . . . . . . . . . . . . . . . 85

6.

Fourth Step, the Appellant’s Comments on Agency Report. . . . . 85 c.

Comments on the Agency Report must be filed within ten (10) days of the filing of the Agency Report. . . . . . . . . . . 86

7.

Fifth Step, the agency’s Rebuttal to Appellant’s Comments on Agency Report... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86 b.

Rebuttals are meant to be filed within five (5) days of filing the Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86

E.

9.

Discovery. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86

10.

Role of the Hearing Officer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87

11.

The Hearing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88

12.

The Decision.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89

Dateline flow of simple, ideal appeal. . . . . . . . . . . . . . . . . . . . . . . . . . . . 90 1.

Filing of Notice of Appeal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90

3.

Agency must file Procurement Record. . . . . . . . . . . . . . . . . . . . . 91

4.

Any party must file objections to qualification (recusal) of Public Auditor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91

F.

XIX.

5.

Agency must file Agency Report. . . . . . . . . . . . . . . . . . . . . . . . . . 91

6.

Appellant’s or any Interested Party’s Comments. . . . . . . . . . . . . . 91

8.

Notice of Hearing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91

9.

Decision. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92

Appeal Remedies:. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92 2.

Money.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92

3.

Other remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93 a.

Prior to award. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93

b.

Remedies after award.. . . . . . . . . . . . . . . . . . . . . . . . . . . 93

Some issues relating to contract performance.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95 B.

Performance Bonding.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95

C.

Contract disputes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97 1.

Procurement Act or Claims Act?. . . . . . . . . . . . . . . . . . . . . . . . . . 97

Guam Procurement Process Primer Ver 1.6 © John Thos. Brown 2009

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2. XX.

Getting paid. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 A.

XXI.

Who hears contract disputes?. . . . . . . . . . . . . . . . . . . . . . . . . . . . 97

Prompt Payment Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 1.

Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100

2.

Discounted settlements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100

B.

Non Prompt Payment Act Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101

C.

Promissory notes.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101

Public enforcement of unauthorized procurement spending. . . . . . . . . . . . . . . . . . . . 102 A.

Guam taxpayers have standing to bring suit against improper spending. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102

XXII.

The Courts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102

XXIII. A review (with commentary and full disclaimer) of some of the OPA Decisions. . . . . 104 1.

OPA-PA-06-001, In the Appeal of the Debarment of Rex. . . . . . 104

2.

OPA-PA-06-002, In the Appeal of Far East Equipment. . . . . . . . 104

3.

OPA-PA-06-003, In the Appeal of RadioCom. . . . . . . . . . . . . . . 104

4.

OPA-PA-07-002, In the Appeal of Emission Technologies. . . . . 105

5.

OPA-PA-07-006, In the Appeal of Great West Retirement Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106

6.

OPA-PA-07-007, In the Appeal of Dick Pacific. . . . . . . . . . . . . . 106

8.

OPA-PA-07-009, In the Appeal of Pacific Security Alarm. . . . . . 109

9.

OPA-PA-07-010, In the Appeal of Far East Equipment . . . . . . . . 109

10.

OPA-PA-07-011, In the Appeal of JMI Medical . . . . . . . . . . . . . 110

11.

OPA-PA-08-009, In the Appeal of Captain, Hutapea. . . . . . . . . 112

12.

OPA-PA-08-008, In the Appeal of Latte Treatment Center. . . . . 112

INDEX OF PERTINENT DECISIONS, APPEALS and AUTHORITIES. . . . . . . . . . . . . . . . . . . . . . 117

Guam Procurement Process Primer Ver 1.6 © John Thos. Brown 2009

Page vi

Procurement Lore or Procurement Law ? A GUAM PROCUREMENT PROCESS PRIMER (Both more and less than you will ever want to know)

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 Spain’s 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. Martín [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 Agaña 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 José 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 Agaña, 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 Agaña 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 Guam Procurement Process Primer Ver 1.6 © John Thos. Brown 2009

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Palace, at ten o’clock 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 Pèrez Don Juan Blas Don Andrés 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 Pèrez 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 principalía 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 principalía were also referred to as “Don” or “Doña” 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 principalía, 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 part of Guam daily life and procurement history. Guam Procurement Process Primer Ver 1.6 © John Thos. Brown 2009

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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.

Originally enacted in 1982, becoming effective in October 1983, and major overhaul in 1985, adding more MPC, and other tinkering since.

2.

Based on Model Procurement Act, but not updated a.

B.

C.

“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 Guam’s organizational structure and function. Because 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. 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 5 GCA § 5030.)

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.

Based on ABA Model Procurement Regulations.

2.

Note some individual agencies have own regulations.

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.

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2.

D.

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.

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.

c.

Also note 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

Other jurisdictions, experts, authors, etc. 1.

Other Model Code States, e.g., Maryland, Hawaii http://www.aia.org/SiteObjects/files/abamodelcode.pdf a.

E.

Maryland State Board of Contract Appeals: http://www.msbca.state.md.us/

2.

Note difference between detail and General Principles, with guidance from e.g., Federal Acquisition Regulations (FARs), http://www.arnet.gov/far/90-36/pdf/toc.html

3.

There isn’t 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 authoritatively 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.

Lore: As Carlos Madrid described the incident above, the procurement of supplies to meet the dire needs of the Marianas 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.

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The best and worst of explanation often offered in defense of questioned procurement practice is, “but that’s 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 now really being discovered and, sadly, some very fundamental aspects are only now being acknowledged. For instance, for years GovGuam GSA has directly purchased directly from the Federal Supply 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. 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 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.

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II.

PURPOSES AND POLICIES of Guam Procurement Law A.

The law and regulations specify certain purposes or policies of procurement law. These are not mere 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.

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 Act] 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 more certain and regular for the vendors.” (Official Comment, 5 GCA § 5001.)

C.

to permit the continued development of procurement policies and practices (5 GCA § 5001(b)(2)).

D.

to provide for increased public confidence in the procedures followed in public procurement (5 GCA § 5001(b)(3)).

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.

This Chapter requires all parties involved in the negotiation, performance, or administration of territorial contracts to act in good faith. (5 GCA § 5003.)

2.

A Member will conduct its business fairly, honestly and with integrity. (Guam Chamber of Commerce Code of Ethics, Principle I.)

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.)

4.

Making and keeping “determinations”. Throughout the procurement law and regulations, procurement officers are meant to make “determinations”. The author takes the view that any determination, including a determination of what is “the best interests of the Territory”, while deferring to agency judgment, should be kept in some record form, requires a deliberative balancing of all the competitive policies of the procurement act, including fair and equitable treatment of all parties, and not be impulsive, partial, deceptive, arbitrary, unreasonable or capricious.

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a.

b.

“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.) (1)

That code is adopted verbatim from MPC §1-301. There are Model Regulations intended to implement that code, which do not seem to have made their way into the Guam Procurement Regulations, notwithstanding the Comment to the Guam Procurement Act, which says “[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, 5 GCA § 5030.)

(2)

Model Regulations implementing the Code require: (a)

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.)

(b)

Each written determination shall set out sufficient facts, circumstances, and reasoning as will substantiate the specific determination which is made. (R1-201.01.2.)

(c)

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.)

(d)

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. (R1-201.01.5.)

Under the original Procurement Act, certain specific determinations were said to be “final and conclusive unless clearly erroneous,

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arbitrary, capricious or contrary to law.” (5 GCA § 5425.) Under revisions allowing appeals to and oversight of the Public Auditor, “[n]otwithstanding § 5425 of this Chapter, no prior determination shall be final or conclusive on the Public Auditor or upon any appeal from the Public Auditor.” (5 GCA § 5703.) F.

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.)

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).)

to foster effective broad-based competition within the free enterprise system (5 GCA § 5001(b)(6)). 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 § 1102.03.)

2.

All specifications shall seek to ... encourage competition in satisfying the Territory’s needs, and shall not be unduly restrictive. (5 GCA § 5265.)

3.

It is the policy of Guam that specifications permit maximum practicable competition consistent with obtaining supplies and services that are “adequate and suitable” for its needs.. (5 GCA § 4102(a)(1).

4.

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.)

5.

Unless other wise authorized by law, all territorial contracts shall be awarded by competitive sealed bidding.... (5 GCA § 5210(a).)

6.

Emergency procurements shall be made with such competition as is practicable under the circumstances.... (5 GCA § 5215.)

7.

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).)

8.

“Fair and open competition is a basic tenet of public procurement. Such

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competition reduces the opportunity for favoritism and inspires public confidence that contracts are awarded equitably and economically.” (MPC Official Commentary, # 3, §3-201, which is the same as 5 GCA § 5210(a).) 9.

H.

A Member should engage in fair, free and open competition with its competitors (Guam Chamber Ethics, Ethical Commentary III-2.)

to provide safeguards for the maintenance of a procurement system of quality and integrity (5 GCA § 5001(b)(7)). 1.

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;

b.

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;

c.

sound recordings of all pre-bid conferences; negotiations arising from a request for proposals and discussions with vendors concerning small purchase procurement;

d.

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.

“[P]rotecting the integrity of the procurement process is one of the reasons for the requirement to create and maintain a procurement record.” (In the Appeal of Latte Treatment Center, Inc., OPA-PA-08-008, 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.)

3.

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.)

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4.

Ethical Standards a.

For Government Employees: Any attempt to realize personal gain through public employment by conduct inconsistent with the proper discharge of the employee’s 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. (1)

b.

I.

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 required, in any event, proof of “a connection between” any payment by the contractor/offeror and the relevant solicitation. 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 employee’s “appearance of impropriety is a serious impairment to the public confidence and integrity of the solicitation process....” (Id., at p 15.)

For Non-Government Employees: Any effort to influence any public 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. [These 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.] (5 GCA § 5626.) (1)

A Member should avoid taking unfair advantage of its customers, suppliers, competitors and employees. (Guam Chamber Ethics, Ethical Commentary I-2.)

(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.)

to require public access to all aspects of procurement consistent with the sealed bid procedure and the integrity of the procurement process. 1.

The [procurement] record required by § 5249 of this Chapter [see above] is

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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. 2.

Consider more broadly, the Freedom of Information Act, known also as the Sunshine Act 5 GCA, Div. 1, Chpt 10, § 10101 et seq. a.

J.

To date, the Public Auditor has not promulgated any such rules.

The author is of the view that the FOI content and process rules is 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.

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.)

2.

The Procurement Record shall include “the requesting agency’s determination of need.” (5 GCA § 5249(e).)

3.

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.)

b.

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. O’Brien, The George Washington University, Law School Government

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Contracts Program, p. 41, cited hereafter as “Nash, Cibinic and O’Brien.)

4.

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).)

d.

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).)

e.

“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 O’Brien, p 85.)

“Lack of advance planning does not justify noncompetitive procurement.” (Nash, Cibinic and O’Neal, p. 38.) a.

K.

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 procedures other than competitive procedures on the basis of lack of advance planning.”

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....”

2.

“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.

3.

“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

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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.) 4.

Businesses “licensed to do business on Guam”: a.

Must maintain “an office or other facility” on Guam

b.

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.

(2)

Regularly carries inventory for regular immediate sale of at least 50% of supplies to be procured.

(3)

Retail or wholesale location that regularly carries an inventory on Guam of items of similar nature to those sought 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.

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 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 below.

6.

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.)

7.

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

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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 would reach the same result; that issue is for a court to determine.

L.

M.

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.

b.

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, minorities, etc.) Status issues 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 does not apply to Guam.

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.

2.

§ 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.

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).)

2.

Exceptions are made (id.) for

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N.

a.

Pre-emptive federal government funding regulations, if any.

b.

Grants or inter-governmental contracts.

c.

Gifts, bequests and other such private grants and donations, or cooperative agreements.

A word 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 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, it’s 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.

3.

The Guam legislature chose to forego procurement training and education when it adopted the Guam version of the Model Procurement Code. In this regard it is important to note a significant “hole” in the procurement law and regulation: 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.)

b.

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

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all. Guam law does NOT address “training and education”. 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.

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.

e.

Official Commentary to MPC § 2-503 make the following points:

f.

(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.”

(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].”

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 University’s 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 world’s most heavily regulated, and a well-established regime of laws, statutes and policies addresses each of the president’s concerns. But rules can’t spend money wisely, only people can. And we’ve got huge people problems.... “

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(2)

III.

“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.”

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). 1.

All Executive Branch bodies are subject to the general requirements of Guam procurement law and regulation, although certain bodies are authorized to directly conduct their own procurement. These bodies 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.) a.

Note the author’s comments above in respect of Executive Order 2000-25 and the Governor’s lack of power to make law or regulation in respect of procurement matters.

2.

This has led to such Agencies often adopting their own procurement regulations, with their own numbering/classification systems, even though the general Guam procurement regulations preempt anything substantively inconsistent (5 GCA § 5131; Guam Imaging Consultants, Inc., v. Guam Memorial Hospital Authority, Guam Supreme Court, 2004 Guam 15 at ¶¶ 22, 41).

3.

The author believes this is not a satisfactory development and efforts should be made to identify the “core” procurement regulations that are intended to apply uniformly throughout GovGuam, allowing Agencies to then only

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adopt such additional regulations as are necessary to conduct their direct procurements. This will have the added benefit of focusing agency procurement practice on the standardized general procurement regulations and away from any notion they may be a law unto themselves. 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 DPW Director is the chair. (5 GCA § 5101.) 1.

2.

C.

The Policy Office is responsible (5 GCA § 5102) for promulgation of Regulations governing “procurement, management, control and disposal of all supplies, services and construction to be procured by the Territory.” a.

“The Policy Office shall not delegate its power to promulgate regulations.” (5 GCA § 5130(b).)

b.

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).)

The Policy Office is an on-again-off-again institution. Presently, it is the author’s understanding that it lacks the appointees necessary to function.

GSA: The CPO of GSA shall serve as the central procurement officer “with respect to supplies and services.” (5 GCA § 5113(a).) The CPO’s duties include: 1.

Procure or supervise procurement of all supplies and services. a.

CPO has a limited power (2 GAR § 2105) to delegate her authority to any government body or official (5 GCA § 5114) and to revoke any authority previously delegated (2 GAR § 2105). Legislation occasionally limits that authority (e.g., 5 GCA § 5116 re GPA) or preempts it (e.g., 5 GCA § 5117 re Guam Preservation Trust).

b.

Items of works of art, publications, A&E services and investment or actuary services are generally exempt from the requirement of direct CPO or DPW procurement, but the procuring agencies must do so pursuant to general procurement law and regulation. (5 GCA § 5124.)

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2.

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).)

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).)

c.

Ascertain or verify that supplies, services, or construction items procured by such officer conform to specifications. (2 GAR § 8102(b).)

d.

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).)

e.

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.)

f.

Disposal: Surplus supplies shall be offered through competitive 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. 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

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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.

D.

DPW: The Director of DPW shall serve as the central procurement officer with respect to construction. 1.

E.

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.)

Duties of the Director of DPW include (5 GCA § 5113(c)(2)): a.

Procure or supervise the procurement of all construction needed by Guam.

b.

Establish and maintain programs for inspection, testing and acceptance of construction.

c.

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.

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.

There is curious politics behind the name change. 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.

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b.

F.

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.

3.

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.)

4.

The role of the Public Auditor in Procurement Appeals will be discussed below.

Attorney General 1.

IV.

The Public Auditor is still the Public Auditor; only the name of the office has changed. (1 GCA §§ 1903, 1906, etc.)

The Attorney General has a limited role to play generally, although a primary role as attorney for any Agency it represents. Of course, the Attorney General should strive to uphold the law and not undermine it. The AG serves as legal counsel and provides legal services to the Policy Office and the GSA (and even the Public Auditor in some circumstances – 1 GCA § 1909(d)). 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.)

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.

Competitive Sealed Bidding (2 GAR § 3109(b); 3109(n)(1))

2.

Multi-step Sealed Bidding (2 GAR § 3109(r))

3.

Small Purchases (2 GAR § 3111)

4.

Sole Source (2 GAR § 3112)

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5.

Emergency (2 GAR § 3113)

6.

“Professional” Services (5 GCA §§ 5216 and 5121; 2 GAR § 5108)

B.

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.

C.

“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.)

D.

Other special circumstances: 1.

Unsolicited Offers (5 GCA § 5219)

2.

Purchases from “a nonprofit corporation employing sheltered or handicapped workers”. (5 GCA § 5217)

3.

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)

4.

“Unless other wise [sic] authorized by law” (5 GCA § 5210(a)). a.

E.

Direct purchases from the United States (5 GCA § 5122) are not “otherwise authorized” – see section below on Federal Supply Schedule purchases.

Contract renewals. 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

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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 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)).

V.

2.

A properly procured contract may contain a renewal option, but such a contract provision is subject to strict conditions, as discussed in the article below dealing with contract types.

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 ....”

“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 cashier’s check or standby letter of credit might be alternatives (see, 2 GAR § 3109(c)(4)(D).

B.

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).)

2.

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.)

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C.

D.

VI.

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).)

4.

Failure to provide required bid security may cause the bid to be rejected as non-responsive; see section on materiality and responsiveness below.

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.

2.

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.

3.

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).

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.

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.)

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B.

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. It’s meant to answer the “what do we want from you and when do we want it” question.

2.

A purchase description of what it is 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. a.

C.

“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”.

4.

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.

5.

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.

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.

2.

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

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from “the date of distribution” to the “time and date set for receipt of bids”. (2 GAR § 3109(d).)

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.)

b.

Further, “a shorter time [may be provided if] deemed necessary for a particular procurement as determined in writing by the procurement officer.” (Id.)

Withdrawal, cancellation and rejection of all bids 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).)

2.

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).)

3.

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).)

4.

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).)

b.

Cogent and compelling reasons for cancellation need not be given to disappointed bidders, but such reasons must exist; 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.) In that case, the plaintiff tried, unsuccessfully, to enjoin an agency from cancelling a bid based on the sparseness of the information given in the notice of cancellation, and the remedy and factual posture of the case was an uphill battle from the start.

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 Territory’s “best interests”, including: (1)

there is no longer a need

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5.

E.

(2)

“prices exceed available funds and it would not be appropriate to adjust quantities to come within available funds” [note this condition is not applicable to cancellations prior to opening due to lack of funding]

(3)

the specifications were ambiguous or inadequate

(4)

the solicitation did not provide for consideration of all factors of significance to the territory

(5)

appearance of collusive bids

(6)

all otherwise acceptable bids or proposals received are at clearly unreasonable prices

b.

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.)

c.

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. Here note that the right to request reasons granted to an “unsuccessful” bidder or offeror probably does not apply to a rejection of all bids; the Court’s emphasis on “the best interests of the Territory” in the J&B Modern Tech case (supra), which is also a test for rejection of all bids, lends support to this argument.

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, below.)

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.

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F.

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.

3.

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))

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”).

b.

A Responsible bidder (capable, trustworthy; not a guaranty of performance, only expectation of performance).

c.

“Lowest” price/cost.

2.

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).)

3.

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 company. (In the Appeal of JMI Medical Systems, Inc., OPA-PO-07-011, pp 10-11.)

4.

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.

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G.

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))

b.

Any bidder’s 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)

The acceptability evaluation is not conducted for the purpose of determining whether one bidder’s item is superior to another, but only to determine that a bidder’s offering is acceptable as set forth in the IFB. (Id.)

(2)

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).)

(3)

“It is improper to use responsibility-related factors or subfactors if the evaluation is merely to determine acceptability.” (Nash, Cibinic and O’Neal, p. 271.)

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. It is critical to determine 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 Appeal of J&G Construction, OPA-PA-07-005.)

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.)

e.

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. (Id.) So, 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.,

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OPA-PA-08-007 (at part III, D of the Decision, beginning p 13; and note that J&G Construction was decided subsequently to Guam Publications, and specifically declared its distinctions between responsive and responsible were matters “of first impression”.) H.

“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).))

2.

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.

b.

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.

c.

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”.

d.

Low bids can be withdrawn but not corrected if the mistake is obvious but the intended bid amount is not clearly evident.

e.

When a mistake is suspected, the Procurement Officer “should request the bidder to confirm the bid”. Examples include errors on

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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.

3.

f.

Any kind of mistake can allow a bidder to withdraw or correct a bid prior to the time set for bid opening because bids are not firm until then.

g.

After award, mistakes cannot generally be corrected unless the Head of the purchasing agency determines it would be unconscionable not to allow the correction.

h.

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).)

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&M’s 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.)

b.

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.)

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

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submission might be determined to be waiverable [sic] irregularities”. (Id., at p 5.) I.

What is a Responsible bidder? a.

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).) (1)

Capability is determined as of the time of award. (2 GAR § 3101(1).)

(2)

The author has the view that the determination of capability is more objectively determined that integrity, which is a more subjective judgment.

(3)

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. (a)

b.

Responsibility involves the question whether the contractor can or will perform as it has promised. (In the Appeal of J&G Construction, OPA-PA-07-005.) (1)

c.

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 offeror’s integrity.

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.

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,

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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. (1)

d.

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.

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: (1)

“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; (a)

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.

(b)

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 when required, not necessarily at bid award (if performance is to occur sometime later). It is not so

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much an issue of readiness to perform but ability to perform when required. (2)

“a satisfactory record of performance;

(3)

“a satisfactory record of integrity;

(4)

“supplied all necessary information in connection with the inquiry concerning responsibility;” and

(5)

“qualified legally to contract with the territory [that is, a business license]; (a)

Compare Emission Technologies vs. Dick Pacific: i)

In the Appeal of Emission Technologies, Inc., OPA-PA-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, suggesting the business license of an offeror in an RFP is not necessary until “consideration of the bidder for the award” (at page 7 et seq.).

ii)

“It is improper to use responsibility-related factors or subfactors if the evaluation is merely to determine acceptability of a proposal.” (Nash, Cibinic and O’Brien, p 271.)

iii)

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

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to have a Guam business license and specialty license at bid opening. The result in that case can possibly be justified based on the specialty license matter (though the author is not convinced; this involved an IFB, not an RFP – see discussion of RFPs below).

(6)

e.

iv)

A “requirement that bidder possess an operating license properly relates to responsibility, notwithstanding solicitation language stating it affects responsiveness”. (Formation of Government Contracts, Third Edition, John Cibinic, Jr., and Ralph C. Nash, Jr., CCH/ Wolters Kluwer, p545, cited hereafter as Cibinic and Nash.)

v)

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.

vi)

But consider the necessity of having a business license to obtain the benefit of the local preference provision (see 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.

Bid or performance bonds should not be used as a substitute for a determination of bidder or offeror responsibility. (2 GAR § 3102(f).)

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

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determination of bidder 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. f.

Consider whether Bidder Qualification Statement (“BQS”) issues are ”nonresponsive” or “nonresponsible”: (1)

g.

h.

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.

The prospective contractor may demonstrate the availability of necessary financing, equipment, facilities, expertise, and personnel by submitting upon request (§ 3116(b)(3)): (1)

evidence that such contractor possesses such necessary items

(2)

acceptable plans to subcontract for such necessary items; or

(3)

a documented commitment from, or explicit arrangement with, a satisfactory source to provide the necessary items.

Inquiry into determination of responsibility: (1)

“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).) (a)

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 unreasonable, and the failure or refusal to provide that information would be reasonable; but would you want to chance it?

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i.

(2)

“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 bidder’s or offeror’s past record of contract performance in the public and private sectors.” Official Commentary No. 2, MPC § 3-401.)

(3)

When the agency had reason to suspect an offeror’s integrity or other matters bearing on the offeror’s 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.)

The interesting requirement for a writing when making the determination of nonresponsibility but not for responsibility: (1)

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.

(2)

A written determination is only made if the prospective contractor who otherwise would have been awarded the contract is found nonresponsible. (§ 3116(b)(5).) (a)

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.

(b)

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 bidder’s character and reputation. It has been said that 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.

(c)

Recall the Browning-Ferris Matter from Hawaii, supra. At first blush, it seems incredible that a bidder

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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 officer’s determination of responsibility. Thus, higher bidders have a very heavy burden to overturn any determination of responsibility; they, in effect, must prove the procurement officer’s determination of responsibility was the result of clearly unreasonable error, fraud or other serious fault, such as, perhaps, ethical violations. (3)

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? (a)

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 contractor’s” responsibility that is in question, that is, the lowest responsive bidder. It is in the government’s 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.

(b)

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 individual’s 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 any findings of capability and of integrity, so as to minimize any imputation of lack of integrity if

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the basis for the nonresponsibility determination is lack of capability. (4)

“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”. (a)

Since solicitations are generally meant to be initiated by distributing and mailing solicitations to potential contractors (see “bidding timing”, 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. i)

This is broadly reminiscent in notion to the Federal government’s Central Contractor Registration (http://www.ccr.gov/ ), but the CCR is much more blinkered and restrictive than the local procurement requirements to seek out competition.

(b)

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.)

(c)

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).)

(d)

The fact that a prospective contractor has been prequalified does not necessarily represent a finding of responsibility. (Id.)

(e)

There is nothing to prohibit GovGuam from soliciting any information about any need or upcoming

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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. J.

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 bidder’s 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), the current codification of the regulation.) The regulation 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, and the referenced regulation makes that part of the clause proper.

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

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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.) (2)

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.

(3)

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. c.

K.

VII.

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 vendor’s ability to bid the solicitation only because the vendor lacks the full range of products sought, the government loses the benefit of the vendor’s 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.

Wage Determination issues: For a discussion of the application of Wage Determination law to procurement, see the discussion of In the Appeal of Advance Management, Inc., in the review section at the end of this outline.

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.

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.

C.

Multi-step bidding “is designed to obtain the benefits of competitive sealed bidding

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... and at the same time [obtain] the benefits of the competitive sealed bid proposals procedure....” (2 GAR § 3109(r)(1).)

D.

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.)

2.

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.

3.

Multi-step bidding can only be used “when it is not practical to prepare initially a definitive purchase description”. (Sub§(r)(2).) “Purchase description” is the same thing as “specification”. (See, Specifications, below.)

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.

The first phase can consist of further multiple steps. See, generally, 2 GAR § 3109(t). 1.

The first phase technical offer submissions are unpriced or have sealed prices and are not publically opened.

2.

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).)

b.

It follows from this that, during the phase one discussion, where appropriate, technical offers can be amended and supplemental information may be provided by the offerors to demonstrate the acceptability of their offers, and the government may make minor amendments to the IFB purchase description to reflect a better

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knowledge of what offerors may reasonably be expected to offer. (2 GAR § 3109(r)((2)(b).) Bear in mind that purchase descriptions are meant to be drafted, and therefore amended, so as to maximize competition while acquiring the essential functions required to meet the Territory’s minimum needs, as discussed in the Specifications section below.

3.

c.

If any contemplated amendment to the IFB specifications “will significantly change the nature of the procurement”, the IFB must be cancelled (sub§(r)(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).)

The technical offers are evaluated in the first phase “solely in accordance with the criteria set forth in the” IFB. (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

(2)

potentially acceptable, that is, “reasonably susceptible of being made acceptable”, or

(3)

unacceptable.

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. (Sub§3109(t)(4)(c).)

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.

d.

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 O’Brien, 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, which is the functional equivalent of being non-responsive. (Offerings which do not meet the acceptability requirements shall be rejected as nonresponsive; 2

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GAR § 3109(n)(3).) e.

4.

Discussions are only had or continued with acceptable or potentially acceptable bidders to further refine the offers and specifications, not with 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)), but unacceptable offers are not afforded that opportunity (sub§ 3109(t)(6)). a.

5.

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 in assessing the relative order (the rank) of the competing qualified offers, as discussed below.

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.

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).) a.

Bid prices are not to be considered during phase one, only phase two. (2 GAR § 3109(r)(1).)

b.

Phase two is conducted by opening priced bids from all acceptable technical offerors, and determining the lowest bidder as in competitive sealed bidding, except only the winning bidder’s technical offer is publically disclosed. (Sub§ 3109(v).) (1)

VIII.

The priced bids are submitted sealed, either with the original technical offers or after phase one, depending on the requirements of the IFB as originally issued.

REQUESTS FOR PROPOSALS A.

Competitive sealed proposals are not allowed. See 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

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repeal of the statute repealed the corresponding regulation.” (Fleet Services, Inc. v. Dept. of Administration, 2006 Guam 6, ¶ 15.) B.

C.

Requests for Proposals (RFPs) are only allowed for “professional services”. 1.

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.

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.)

3.

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.)

The procurement process for RFPs is built around a negotiation process, and has its own procedural 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 below) when under that amount. (§ 3114(b).)

2.

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

b.

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.

3.

The “need for services” is essentially the RFP, 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 above) and, “additionally shall consist of distributing Requests for Proposals to persons interested in performing the services”. (§ 3114(e.)

4.

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

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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. 5.

As in the competitive sealed bid process, proposals must only be evaluated based on factors stated in the RFP. (§ 3114(f)(2).)

6.

Unlike the phase one acceptability determination in the multi-step bid process (see above), the offerors in an RFP are, after evaluation, ranked in order of “best qualified”. (§ 3114(l).) Remember, RFPs are only allowed for solicitation of professional services, so the only authorized process of ranking offers allowed anywhere in the Procurement Act is in the context of solicitation of professional services; in all other cases, lowest cost prevails.

7.

a.

While normally responsibility-related factors must not be used to evaluate bids or offers, the evaluation of such factors for the sole purpose of ranking offerors already evaluated as qualified, is appropriate in the RFP process.

b.

“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 responsibility-related factors in making relative assessments of the merits of competing proposals....’” (Nash, Cibinic and O’Brien, p 270.)

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 discussed or considered until acceptability of product is determined. 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. a.

The purpose of negotiations is to reach agreement on compensation which must be “determined in writing to be fair and reasonable”

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(which presumably means to both parties, but the author is not making that call without further research).

D.

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”. (See, In the Appeal of Great West Retirement Services, OPA-PA-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 qualifier to conclude acceptable 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.)

d.

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(3)(3(B).)

8.

When the dust settles and an award 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.

9.

Each agency is required to submit annual reports identifying every RFP issued in the preceding year to the CPO.

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?

2.

The statutory definition of “professional services” above does not specifically include them. 5 GCA § 5216(a), which defines when an RFP for professional services can be used, 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.” But Article 5 only deals with the “alternative methods of construction management” (5 GCA § 5302) and not methods of source selection, that is, the procurement methods. 5 GCA § 5301 does, however,

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refer to “professional services within the scope of the practice of architecture, professional engineering, or land surveying”. 3.

The regulations refer to the professional services method of source selection only for architecture, professional engineering, or land surveying services and not the more broadly described “construction” services. a.

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 a thing to be constructed which necessarily involves such services, competitive sealed bidding is required. a.

IX.

The provision of these Regulations applies to every procurement of services within the scope of the practice of architecture, professional engineering, or land surveying.... For the purpose of acquiring the services, described in this Chapter the provisions of §3114 (Competitive Selection Procedures for Services, specified in §2112) of this Guam Procurement Regulations shall be followed. (2 GAR § 5108.)

Example: “Bid security shall be required for all competitive sealed bidding for construction contracts when the price is estimated by the Director of Public Works to exceed $25,000.” (2 GAR § 5103(1).)

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 includes 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 vendores are advised to tread warily.

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Providing a brochure and price schedule could easily be taken to be a binding offer in any given factual circumstance. B.

C.

X.

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, 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.

“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).)

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. 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.

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.” (2 GAR § 3112(b).)

C.

“In cases of reasonable doubt, competition should be solicited. 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

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to meet the need.” (Id.)

XI.

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.)

E.

A record of all contracts made under the sole source procurement shall be maintained and a copy of such record shall be submitted to the Legislature annually. (2 GAR § 3112(d).)

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).)

G.

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.

2.

Where a sole supplier’s item is needed for trial use or testing.

3.

Where a sole supplier’s item is to be procured for resale.

4.

Where public utility services are to be procured

5.

Where supplies are offered through bankruptcy or receivership sales, or other disposition at lower than prevailing market rates.

H.

An example of when sole source procurement is not appropriate is in the Public Auditor’s 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.”

I.

“This method of procurement involves no competition and should be utilized only when justified and necessary ....” (Official Comment, MPC § 3-205.)

SMALL PURCHASE PROCEDURES A.

Small purchase procedures exist for procurement 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).)

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B.

Procurement requirements shall not be artificially divided so as to fall within the small purchase limits. (5 GCA § 5214.)

C.

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.

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).)

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).)

F.

Similar concepts are applied for “accountants, physicians, lawyers, dentists, architects, engineers, or land surveyors”. (2 GAR § 3111(f).)

G.

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

H.

REQUEST FOR QUOTATION (RFQ)

I.

1.

Requests for Quotations are only specifically mentioned in respect of small 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.

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).

2.

Individual purchases under BPAs shall not exceed $15,000 for supplies or

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services or $50,000 for construction. (§ 3112.13(b).)

XII.

3.

The use of a BPA does not authorize purchases that are not otherwise authorized by law or regulation. (§ 3112.13(a).)

4.

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”).

5.

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).)

6.

“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).)

7.

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

EMERGENCY PROCUREMENT (5 GCA § 5215) 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 Governor’s 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 Governor’s 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.

B.

“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.” (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

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2008-16 (GPSS) and 2008-17 (DPW).

XIII.

C.

“Emergency procurements shall be made with such competition as is practicable under the circumstances”.

D.

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.

E.

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.

F.

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.

G.

The law contemplated that the Policy Office would draft regulations which further define “emergency conditions”, but they have not done so: the only regulation on the subject, 2 GAR § 3113, refers to a sub§ 3113(b) for such definition, but it does not appear in the Guam Compiler of Laws’ regulations.

FEDERAL SUPPLY SCHEDULE PURCHASES MUST ADHERE TO SPECIFIED METHODS OF SOURCE SELECTION 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” (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.

C.

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

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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. 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. The FARs, however, require other 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” (Subpart 8.404(c)(3). 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)

2.

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 above, and even though there is no mention at all of the word “local” in the provision. a.

In fact, the 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.

4.

§ 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”.

5.

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.

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6.

XIV.

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.

E.

Lore has had it that the FSSP is 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, in complete disregard of Guam procurement law and regulation. 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).

F.

The Public Auditor has recently 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-PA08-012.)

SPECIFICATIONS A.

SPECIFICATIONS ARE THE BEDROCK OF PROCUREMENT: “The purpose of a specification is to serve as a basis for obtaining a supply ... item adequate and suitable for the territory’s needs in a cost effective manner.... It is the policy of the territory that specifications permit maximum practicable competition consistent with this purpose. Specifications shall be drafted with the objective of clearly describing the territory’s requirements” (2 GAR § 4102(a)(1).) Thus, the most critical and first step in planning and soliciting is to get the specifications right.

B.

“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”.

C.

MINIMUM NEEDS: The specifications in the IFB “shall include only the essential physical characteristics and functions required to meet the Territory’s minimum needs”. (5 GCA § 5268(a).) Bells and Whistles, status symbols, ego trips, and the 95% of the functions you never use should not be part of specifications.

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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).

D.

UNDULY RESTRICTIVE: All specifications shall seek to promote overall economy and encourage competition in “satisfying”, not exceeding, the territory’s needs, and shall not be unduly restrictive. (2 GAR § 4106)

E.

“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))

F.

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).)

G.

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 specifying the reason that similar products lacking those features would not meet minimum requirements for the item. (5 GCA § 5268(b).)

H.

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).)

I.

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 territory’s needs. The government should seek to identify multiple, competitive sources of brand name items. (§ 4103(b)(2)(c).) 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 IFB’s must comply with Guam’s procurement regulations.”

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2.

J.

BRAND NAME OR EQUAL: Use of “brand name or equal” specifications (§ 4103(b)(2)(b))” 1.

K.

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.

The procurement officer must make the written determination that a.

no specification for a common or general use item is available,

b.

and time does not permit the preparation of another form of specification (not including a brand name specification)

c.

and either the nature of the product or the territory's requirements makes use of a brand name or equal specification suitable

d.

or use of the brand name or equal specification is in the territory's best interest.

2.

The specifications must designate three or as many different brands as are practicable as "or equal" references.

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.

4.

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.

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 manufacturer’s brochures relied upon by the responsible person drafting the specifications”. (5 GCA § 5267.)

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

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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.) 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).)

4.

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).)

5.

Special circumstances for specification preparation or use: a.

Third party contracts to prepare specifications: (1)

(2)

6.

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,

(b)

as certified in a written determination made by the CPO, Director DPW or Head of the Agency, and,

(c)

and so long as such officer retains the authority to finally approve the specifications.

Similarly, the Director DPW can authorize third party contracting for specification preparation for construction. (2 GAR §4103(a)(2)(b).)

b.

In emergencies (see Emergency method above; 2 GAR § 3113), “any necessary specifications” may be utilized. (2 GAR § 4103(a)(2)(c).)

c.

For Small Purchases (see Small Purchase method above; 2 GAR § 3111), purchasing and using agencies are generally authorized to prepare specifications for such purchases (Id.).

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)):

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7.

a.

Specifications may provide for alternate descriptions “where two or more design, functional, or performance criteria will satisfactorily meet the territory’s requirements.” (Sub§ (b))

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))

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 implicated properly, so includes it here.

b.

Common or General Use specifications are intended for: (1)

(2)

A supply, service, or construction item used in common by several using agencies or used repeatedly by only one when (a)

commercially produced or provided, and

(b)

the characteristic of it is relatively stable while the frequency or volume of procurement is significant.

When the territory’s 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.

d.

Final approval or cancellation of the specification lies only with the CPO, the Director DPW or the Head of a Purchasing or Using Agency.

e.

Revisions and clarifications of specifications for common or general use items requires similar review and approval.

f.

The provision for common or general specifications is identified in 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

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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.

B.

Note that while there is flexibility in selecting amongst contract types, different contract types have conditions and limitations for their usage. Contract types can only be used as appropriate.

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.

D.

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.

E.

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.)

F.

“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.

A cost-plus-a-percentage-of-cost contract is prohibited. (Id.)

2.

A cost-reimbursement contract requires a determination it is likely to be less costly than any other type. (Id.)

3.

Except for a fixed-price contract, no contract type shall be used unless there is a determination that the contractor’s accounting system permits timely and adequate collection and allocation of cost data. (5 GCA § 5236.)

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G.

H.

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.”

2.

“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.”

Multi-term contracts: A contract may be entered into for any period of time “deemed to be in the best interests of the Territory” (5 GCA § 5237) provided: 1.

the term of the contract and any conditions of renewal or extension are included in the solicitation

2.

funds are available for the first fiscal period at the time of contracting a.

continuance of payment and performance obligations for succeeding fiscal periods are subject to further availability and appropriation of funds (1)

3.

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.

a determination is made that the Territory’s estimated requirements will be reasonably firm and continuing

c.

the contract will “serve the best interests of the Territory by encouraging effective competition or otherwise promoting economies”

The objective of the multi-term contract is to promote economy and 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

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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.” 4.

Multi-term contracts, more specifically (2 GAR § 3121(a)): a.

Are appropriate (and limited: sub§ 3121(c)) (1)

I.

J.

to obtain uninterrupted services extending over more than one fiscal period (a)

where the performance of such services involves high start-up costs, or

(b)

where a changeover of service contractors involves high phase-in/phase-out costs during a transition period.

b.

Are subject to very specific conditions of use and procedure too complex (and rare for Guam) to mention here; see sub§§ 3121(d) and (e).

c.

Are not applicable to any other contract type, including but not limited to contracts for construction or leases (of all property, real and otherwise). (Sub§ 3121(c).)

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 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).))

b.

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).)

Indefinite Quantity (2 GAR § 3119(i)(2): A contract for an indefinite amount of supplies or services to be furnished. a.

Generally, an approximate quantity is stated in the solicitation. It

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may specify a minimum or maximum amount. (1)

“[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).)

b.

Requires a determination “indicating the rationale for using this type of contract and the reasons why another contract form will not suffice.”

c.

Must be reviewed every 6 months for a determination of the continued need for such a contract.

d.

To preserve competition, they shall not be used more than twice per fiscal year for the same supplies or services.

e.

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..

K.

Requirements contracts (2 GAR § 3119(i)(3): This is a variant of indefinite quantity contract for supplies or services that obligates the territory to order all actual requirements during a specified period of time from a particular contractor. (See “multiple awards” below when there is more than one such contractor.) There are special considerations, in addition to the general considerations for indefinite quantity contracts, that must be taken into account for requirements contracts, and variations on that theme, such as “outputs” contracts and “exclusive dealings”.

L.

Leases must be in the best interests of the territory and “not used to circumvent normal procurement procedures.” (2 GAR § 3119(j) a.

M.

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).)

Options to purchase, renew, extend (2 GAR § 3119(k): a.

Options must only be for the benefit of the territory, not the contractor.

b.

Options must be specified in the original solicitation.

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c.

N.

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.

(2)

A written record of the findings and determination must be made part of the contract file.

Multiple Source Contracts (2 GAR § 3122). This involves splitting up contract requirements amongst multiple contractors. The 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: 1.

2.

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 government’s requirements.

b.

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.

c.

Intent to award incrementally must be stated in the solicitation along with the criteria for how the definite quantities will be divvied up.

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.

b.

Multiple awards must be procured either by the competitive sealed bid method, the small purchase method or emergency procurement method of source selection.

c.

To avoid the facilitation of collusion, multiple awards cannot be made when a single award can be made to meet the territory’s needs without sacrificing economy or service, nor for dividing business or settling low tie bids.

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d.

O.

Construction contracts 1.

XVI.

Multiple awards must be allocated to the least number of contractors capable of meeting all government requirements.

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.

PROCUREMENT PROTESTS A.

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. 1.

B.

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).)

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”. Simply losing a bid fair and square does not entitle you to protest. You are aggrieved if there was something particularly improper or irregular in the solicitation, or at least you have reasonable grounds to believe it..

2.

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 bidder’s 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.”

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C.

“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).)

D.

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.”

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, OPAPA-08-011, p 6: “The threshold issue in this matter is whether IBSS’ December 4, 2007, protest was timely.”)

3.

That IBSS case 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.

4.

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.)

b.

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 below, regarding whether mere notice of award to another is sufficient to trigger the 14 day protest filing deadline.

POSSIBLE EXCEPTION FOR PRE-BID-OPENING ISSUES: The second key

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take-away is that if you have a complaint about the method of source selection or 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.

b.

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.

c.

(1)

See Appellant’s 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 .

(2)

In L.P. Ganacias Enterprises, supra, a Superior Court case, 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 Invitation For Bid was contrary to law.” It must be noted, however, that this was not a case brought under the review processes of the Procurement Act, but as a civil action seeking a preliminary injunction, which had to be judged by those deferential and unique standards and procedures applicable to such a remedy, not the administrative standards and procedures of bid protests under the Procurement Act (see, L.P. Ganancias, at page 5 et seq.).

Neither the Model Procurement nor Guam law expressly support this possible exception. In contrast, Federal procurement regulations do. (FAR § 33.103(b)(2).) Thus, referring to FAR’s “very

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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 1485-86.) Cibinic and Nash also note that Federal agencies have some leeway for considering protest filed after the 10 [14] day filing limit. (P 1486.) d.

5.

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 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.

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.

E.

The third key take-away is that if you miss a deadline to file a protest (or appeal), absent extreme and unjust circumstances, you will have a snowball’s chance on Guam of ever getting it heard.

F.

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.)

b.

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.)

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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.”

3.

2 GAR § 3115(e)(3) sets out, broadly, the legal bases for rejecting a bid or a proposal/offer.

4.

The three legal bases specifically (but not exclusively) allowed to reject a bid are: a.

The business that submitted the bid is nonresponsible. (1)

5.

And here there is a transcription error in the Procurement Regulations, which, though specifically referring to “Determination of Nonresponsibility”, incorrectly uses the word “nonresponsive”. Note that the corresponding MPC provision says “nonresponsible” (MPR R3-301.03(a)(i).)

b.

This bid is not responsive. Or,

c.

The supply, serve or construction item does not meet the specifications or other acceptability criteria.

The three legal bases specifically (but not exclusively) allowed to reject a proposal (offer) are: a.

The business that submitted the proposal is nonresponsible (and here the Guam law got the word transcribed correctly).

b.

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,

c.

The proposed price is clearly unreasonable.

d.

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 LTC’s 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.

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G.

6.

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 “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.

7.

The regulations speak of no time limit within which to lodge your Request for Reasons.

8.

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 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.

9.

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.

10.

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.

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

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verbally, but a “protest” is more formal and must be in writing. (2 GAR §§ 9101(b) and (c).) 2.

H.

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).): a.

name and address of the protestor;

b.

appropriate identification of the procurement, and, if a contract has been awarded, its number;

c.

a statement of reasons for the protest; and

d.

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.

e.

To expedite handling of protests, the envelope “should” be labeled “Protest.” Technically, the protest “shall” be delivered in duplicate.

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 arguments rejected in In the Appeal of Guam Publications, Inc., OPA-PA-08-007 (at III, A, beginning p 6.)

4.

You are encouraged to review the various Procurement Appeals files published on the Public Auditor’s 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 Auditor’s office).

RESOLUTION OF THE BID PROTEST 1.

Bid protests are intended to be settled, where possible, by “mutual agreement”, which implies an informal dialogue. (5 GCA § 5425(c).) Information required by either party from the other should be rendered expeditiously (2 GAR § 9103(d).).

2.

In the author’s experience, it is rare for there to be any procedure other than a written response; and, often, not even that. In the cases where the Government has instigated a discussion to resolve the protest, issues have been narrowed or avoided altogether.

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3.

Any “interested party” is entitled to receive from the Agency any information bearing on the protest, unless proprietary or otherwise confidential. For this purpose, it appears an “interested party” is more restricted than usually thought, including only persons aggrieved who’ve filed a protest (2 GAR § 9101(a)(1)(a)).

4.

Bid protests decisions are meant to be rendered in writing “as expeditiously as possible” (2 GAR § 9101(g)(1)) and “promptly” (5 GCA § 5425(c)). a.

5.

6.

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.2

The three formal requirements of a decision are (5 GCA § 5425(c)): (1)

It must be in writing, and

(2)

It must state the reason for the action taken, and

(3)

It must inform the protestant of its right to administrative and judicial review.

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).)

2

This Ap peal and Decision brings to mind another incident reported by Carlos Madrid’s Beyond Distances, p 199: ”the repatriation of the deportees served to call the attention of the central

government in Madrid to the administration of Tinian, which had been leased under very obscure terms under Governor Moscoso. Having made continual requests for information and transmittal of the original documents, Madrid finally found it necessary to issue a Royal Decree, signed June 15, 1877 to have the documents sent to Spain. Once this was done, the conclusions were clear: ‘The leasing of Tinian was made without the knowledge of the government’. The private lease of the island ‘is anomalous and illfounded in the legal prescriptions ...’.” Guam Procurement Process Primer Ver 1.6 © John Thos. Brown 2009

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I.

Requests for Reconsideration of Protest Decision 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. This request must be made within 15 days after receipt by the protester of the decision.

2.

This is a potential trap for the unwary because of an inconsistency between this regulation and the law: law does not take that 15 day time period for reconsideration into consideration when determining the time limits required for filing an Appeal. a.

XVII.

In TRC Environmental Corporation SP 160-07, 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”).

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.

2.

Note that the stay only covers solicitation and award. It does not apply to stay performance of a contract that has already been entered into.

“Final resolution” would include awaiting the outcome of an Appeal after the protest. (See, In the Appeal of [IBSS], OPA-PA-08-012, at pp 9-10.) a.

But this would not 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, In the Appeal of Guam Publications, Inc., OPA-PA-08-007, at p 18.) Such action would bear on the ultimate remedy available to an Appellant (see below).

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b.

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.

C.

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.”

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.

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);

3.

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

b.

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.

The general provisions of Guam Procurement Law regarding the automatic stay – and by extension, anything else – override any inconsistent provisions of an Agency’s own regulations. (Guam Imaging Consultants, Inc., v. Guam Memorial

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Hospital Authority, Guam Supreme Court, 2004 Guam 15 at ¶¶ 24, 41.)

XVIII. APPEALS OF BID PROTESTS TO THE PUBLIC AUDITOR A.

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), and

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 Auditor’s power to compel a decision). a.

In Teal Pacific (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.

b.

Note the case mentioned above, Appeal of Midtown Stationery & Office Supply Co., No. 1461, (Maryland State Board of Contract Appeals - “MSBCA”) June 26, 1990, which held that a procurement officer’s response to a mere inquiry did not constitute a decision, so the review board lacked jurisdiction to hear an appeal based on that response.

c.

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)

B.

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.

15 Day Filing Deadline: 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

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Corporation SP 160-07, at page 5.) 1.

Equitable Tolling: Although strictly enforced generally, 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, 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 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.)

b.

In the Teal Pacific appeal (09-002), 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. It may be noted the Appellant and its attorney had previously brought a protest appeal (Teal Pacific (08-010), which was, as this case ultimately was, dismissed due to the recusal of the Public Auditor), thus could not be characterized as unacquainted with procurement processes. The Appellant relied on two Guam Superior Court cases to support its claim. (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, 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. The Court reviewed Guam Supreme Court cases and held that filing deadlines generally (and particularly in the case of protest appeals) are limitations issues and not jurisdictional, and they are subject to equitable tolling. 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

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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 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. (2)

C.

In the second case, Sumitomo Construction (citation in Notice of Appeal), the Court ruled that, substantively, the petition for writ of mandate would fail. Therefore, in the author’s view, the court’s additional finding of a need to notify a protester of its right of review was uncontrolling dicta and not strongly supportive of the Appellant’s argument.

2.

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 the time for filing any appeal is jeopardized. While the equities would favor allowing time for the reconsideration process to take its course, the law fairly clearly indicates the Appeals process is triggered by the initial decision, and the author is aware of no case which holds otherwise. Takeaway: when in reasonable doubt, file an appeal to preserve your rights.

3.

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.

4.

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.

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, Pacific Security Alarm, Inc. v DPW, supra.)

2.

The Public Auditor has the power to review and determine “any matter properly submitted” in connection with the protest or solicitation. (5 GCA

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§ 5703.)

3.

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.

b.

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.

“The Public Auditor’s 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 Auditor’s Decision went beyond (if only slightly) the Findings of the Hearing Officer, 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, some of which were discussed near the beginning of this paper.

c.

The Public Auditor’s power to review agency protest action is “de novo”. From a practitioner’s or vendor’s viewpoint, this is de-lovely and delicious because it provides a complete contrast to how Courts review such actions. (1)

De novo review is contrasted with deferential review. Under a de novo review, the reviewer steps into the shoes of

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the original decision maker and comes to an 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. (2)

When Courts review an agency determination, they use the deferential standard of review. An excellent summation of this standard of review is found in “GMHA’s Supplemental Response to Appellant’s Comments to Agency Report” in the Appeal of J&G Construction, OPA-PA-07-005 ; see http://www.guamopa.org/docs/procurement_appeals/GMHA s_Supplemental_Response_to_Appellants_Comments_to_Ag ency_Report_07_005.pdf . (a)

(3)

The Public Auditor’s 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 Auditor’s decision and findings of fact that must be accorded deferential treatment by the Court: (a)

d.

It has been said that a reviewing court will not substitute its decision for an agency decision even if, in the court’s view, the agency decision is” wrong or even dead wrong”, so long as it is not illegal.

“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.)

The author takes the view that the Public Auditor must be considered to be a functional part of the Executive Branch of government, not subject to the control of the Governor, in the same 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.)

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D.

(1)

“The government of Guam shall consist of three branches, executive, legislative and judicial....” (Organic Act of Guam, 48 USC 1421a.)

(2)

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.

(3)

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.

4.

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].)

5.

OPA jurisdiction does NOT include direct review of Ethical violations. a.

Complaints of ethics violations by Government employees are handled by the Civil Service Commission. (5 GCA §§ 5675, 5676.)

b.

Complaints of ethics violations by non-Government persons are intended to be handled by the Policy Office (5 GCA § 5675), which isn’t empaneled, and governed by its regulations (5 GCA § 5676(a)), which seem not to exist in substance (see, 2 GAR §§ 11112, 11114.)

c.

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 employee’s 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 Auditor’s duty to promote the overall integrity of the procurement process.

OUTLINE OF AN APPEAL:

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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)

At a hearing; or

(b)

With the consent or in the presence of all other parties (or counsel); or

(c)

By means of papers allowed to be presented in the case.

(d)

OPA staff may entertain questions or complaints that are not related to the substance of pending appeals.

(e)

OPA staff shall report communications regarding pending appeals to all parties.

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 doesn’t 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.

c.

CAVEAT: This outline is bare bones, and not even “typical”. It doesn’t canvass every required event or step along the way, just the main points, in the author’s 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

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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. 2.

First step, the Notice of Appeal. a.

The Public Auditor’s 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.

b.

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 .

c.

The minimal requirements for filing a NOTICE OF APPEAL, which is the document you file, in triplicate, to start your appeal, are (2 GAR § 12104(b)): (1)

Name, mailing and business address of the Appellant.

(2)

The bid number or other identification of a solicitation or contract appealed.

(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.

(4)

A statement of what ruling you want from the Public Auditor (the “relief requested”).

(5)

Verification of the facts stated.

(6)

Signed by the Appellant (including representatives).

(7)

Including all documents and documentary evidence.

(8)

Including copies of all final official documents from the protest or contract dispute.

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d.

3.

(9)

Plus a statement that there is no pending court action in the matter (the OPA has a form for this).

(10)

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 there’s 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.

(11)

Anything else you consider particularly necessary to help the Public Auditor understand your case.

Once filed, the OPA must notify the affected GovGuam agency within 24 hours and deliver a copy of the Notice of Appeal. It is up to the agency to notify any counsel, including the Attorney General.

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).)

b.

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 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: i) 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; ii) 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; iii) sound recordings of all pre-bid conferences; negotiations arising from a request for proposals and discussions with vendors

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iv)

v)

4.

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 agency’s determination of need.

(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.

(3)

There are many other requirements throughout the law and regulations of 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. Feel free to request them if not produced.

Objections to OPA jurisdiction (2 GAR § 12104(9)). a.

Any objection or motion addressed to the jurisdiction of the Public Auditor shall be promptly filed.

b.

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.

c.

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 request to disqualify the Public Auditor from” hearing the Appeal” (e.g., conflict of interest or other “recusal” type objection) shall be filed within seven (7) days after the notice of Appeal is filed (but query if the basis of the objection is not known until later, and query the disconnect with 2 GAR § 12601, which allows a disqualification issue to be raised “prior to the hearing”; the author is of the view the 7 day

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notice provision sows more confusion than necessary and should be repealed). d.

5.

6.

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. Such dismissals have been for such tenuous reasons as the Public Auditor’s 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-09-002), or her husband’s legal firm represented one of the parties (In the Appeal of Far East Equipment, OPA-PA-08-001). 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 Auditor’s disqualification (see, her “Inaugural Remarks”, January 9, 2009, http://www.guamopa.org/docs/2009_Inaugural_Remarks.pdf ).

Third Step, the Agency Report: a.

The guts of the Agency Report is the agency’s 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.

b.

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.

c.

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.

d.

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).)

Fourth Step, the Appellant’s Comments on Agency Report (2 GAR § 12104(c)(4)):

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a.

This is were the Appellant gets to tell the agency, “Did not”.

b.

Any interested party may also comment on the Agency Report. (1)

c.

7.

8.

Comments on the Agency Report must be filed within ten (10) days of the filing of the Agency Report.

Fifth Step, the agency’s Rebuttal to Appellant’s Comments on Agency Report. a.

This is where the agency gets to tell the Appellant, “Did too”.

b.

Rebuttals are meant to be filed within five (5) days of filing the Comments to which the rebuttal is addressed.

Disregard of Comments (or Rebuttal?) if not timely filed. a.

9.

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).) The author suspects the meaning to probably be a bit broader than that; that “means” probably means “includes”, because the “prospect of receiving an award” 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.

“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?

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

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direct a response.

10.

(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 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.)

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.

(2)

may require parties to state their positions with respect to the various issues.

(3)

may rule on motions and other procedural items.

(4)

may fix time limits for submission of documents.

(5)

shall receive written, oral, or otherwise presented testimony, evaluate such testimony and make recommendations to the Public Auditor.

(6)

may consider testimony and evidence submitted by any competing bidder or contractor.

(7)

may regulate the course of the hearing and the conduct of the participants.

(8)

may require evidence in addition to that offered by the parties.

(9)

may receive, rule on, exclude, or limit evidence, and limit

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lines of questioning or testimony which are irrelevant, immaterial, or unduly repetitious. (10)

(11)

11.

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.

(b)

excluding testimony.

(c)

expelling a party or person.

shall prepare a written determination of findings after the hearing, and recommend to the Public Auditor a course of action.

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 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.

Ordinarily, only one “hearing” will be held, but there could be numerous pre-hearing conferences and motions hearings.

c.

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.

d.

Testimony is normally given under oath or affirmation.

e.

Hearings are normally recorded, and the recording eventually made available on the OPA website.

f.

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.

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g.

12.

(2)

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.

(3)

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 can’t just say something is a fact without proving it; well, you can, but it won’t carry much weight. (a)

Opposing parties get a chance to question the testimony, witnesses and other evidence after it is presented (cross examination).

(b)

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.

(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.

(5)

At any point in the proceedings, the Hearing Officer or Public Auditor can interject questions of parties, witnesses and counsel.

(6)

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.

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.

The Decision

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E.

a.

This is where the Public Auditor gets to tell both the Appellant and the agency where they each got things so horribly wrong.

b.

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.

c.

As indicated above, most Decisions of the Public Auditor repeat 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. The author does not share this view, but if put to a choice, would choose keeping the Decision rather than the Findings. The author considers it instructive to understand the perspective of the various Hearing Officers in their separate Findings. He also considers it important that the Public Auditor have independent input as to her unique auditing perspective, and reads both Findings and Decision to try to determine when and how such a perspective may assert itself. Finally, he feels that the Public Auditor must serve as the central source of consistent authority, notwithstanding the various Hearing Officers appearing from time to time.

d.

Each Decision is posted to the OPA website.

Dateline flow of simple, ideal appeal. 1.

Filing of Notice of Appeal a.

2.

Aggrieved Person (Appellant) must file Notice of Appeal OPA within 15 days of receipt of rejection (Final Decision) of Protest

Notifying others of filing of Notice of Appeal a.

Appellant must serve copy of Notice of Appeal to Agency (1)

Within 24 hours of filing Notice of Appeal

b.

OPA must notify Agency the appeal has been filed (1) Within 24 hours

c.

Agency notifies Interested Parties (1)

Within 24 hours

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d.

Agency notifies counsel, including AG (1)

3.

4.

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

b.

No requirement, but good practice, that Appellant be given copy by Agency

Any party must file objections to qualification (recusal) of Public Auditor a.

5.

6.

If known, must be filed within seven (7) days after the Notice of Appeal is filed

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.

b.

No requirement, but good practice, that Appellant be given copy by Agency

Appellant’s or any Interested Party’s Comments on the Agency Report a.

No requirement to file (1)

7.

If filed, must be filed at OPA within ten (10) days after OPA’s receipt of the Agency Report, with copy delivered to the Agency.

Agency’s Rebuttal to any Comments on Agency Report a.

No requirement to file (1)

8.

No time limit, but why wait?

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).

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.

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9.

F.

Decision a.

Within thirty (30) days of the hearing, a Decision and Findings shall be prepared.

b.

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.”

Appeal Remedies: 1.

One major reason there is not much literature about procurement issues is that the remedies available rarely make anyone whole. There just isn’t 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 don’t tend to spend much time pursuing procurement matters; principle is one of the last considerations, and principal one of the first.

2.

Money: a.

“Reasonable Costs” are allowed but not damages (5 GCA § 5425(h)): (1)

(2)

For the put-upon (that is, should have got the award but didn’t) Protestant, “Reasonable Costs” at the Protest level includes bid preparation costs BUT NOT attorney’s fees nor lost profits or other such damages. (2 GAR § 9101(g)(2).) (a)

The inclusion of attorney’s fees as part of costs is different at the Appeal level from the rule at the Protest level. As noted above, such fees are not allowed in a Protest Decision. However, “[t]he Public Auditor shall have the power to assess” the fees as part of reasonable costs at the Appeal level. (5 GCA § 5425(h)(2).)

(b)

Damages are not allowed. Damages include such things as lost profits. Bear in mind that, without award, there is no contract, and no contract, no contract damages.

For the put-upon (that is subjected to a protest made “fraudulently, frivolously or solely to disrupt the procurement process”) government/agency, “Reasonable Costs” INCLUDES attorney’s fees, both at Protest and Appeal levels.

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(a)

3.

Again, no damages (“costs” but not “damages”), such as price increases due to delays, expenses incurred to provide interim needed goods or services, or the like.

b.

“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.) Doesn’t include “through to the date actually paid”! The Guam Compiler’s 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.

c.

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.

Other remedies: a.

Prior to award, improper solicitations and 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)). (5 GCA § 5451.) (1)

b.

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.)

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): (1)

If the person did (act fraudulently or in bad faith), (a)

The contract may be ratified and affirmed if in the best interests of the Territory; or

(b)

The contract may be declared null and void;

(c)

There is no explicit relief offered to the vendor who lost out on the award, but consider possibility of bringing civil action against them for the economic

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tort of intentional interference with prospective economic advantage or other unfair competition or fraud tort. i)

(2)

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.

(d)

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.)

(e)

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 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.)

If the person did not (act fraudulently or in bad faith): (a)

The contract may be ratified and affirmed if in the best interests of the Territory; or

(b)

The contract may be terminated [compared to “null and void” when fraud or bad faith] and 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?? i)

(c)

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).

Regardless whether the contract was awarded

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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. (3)

G.

Request for Reconsideration 1.

XIX.

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 postaward remedies, such remedies being 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 must question the result; perhaps the appropriate result would have been to simply re-solicit. The author appreciates the desire to avoid any re-bid, and thinks the Public Auditor probably should be able to order the award be given to the next responsive and responsible bidder, but fears that may not be within her powers as written.

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.

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.

B.

Performance Bonding: (Remember: “bond” means “security”.)

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1.

2.

3.

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.

b.

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.

c.

Discussion of contract damages and other remedies, as well as the law of surety, is well beyond the scope of this paper.

Services or supplies. As discussed above in the section on Bid Bonding, the bid security for supplies and services is intended to carry over, without 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.

b.

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.

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

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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).) b.

C.

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).)

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.

2.

Procurement Act or Claims Act? 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.

It is worth noting that the Procurement Act provisions regarding contract disputes was adopted by the 18th Guam Legislature while the Government Claims Act (5 GCA § 6101) was adopted by the 17th Guam Legislature (and intended to mostly continue the effect of the prior claims act provisions – 5 GCA § 6107). For this and other reasons alluded to below, the author believes the Procurement Act prevails; but, as he has had no practical experience with the Guam Claims Act, he is not laying his reputation on the line over that statement.

b.

See, Sumitomo Construction, Co. vs. Government of Guam, discussed below regarding pre-judgment interest.

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 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

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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”)?

3.

(2)

Note, however, that 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).)

(3)

The Procurement Regulations, moreover, create more confusion by stating, “Subject to Subsection 9103(c)(2) of this Section [which refers to 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).)

(4)

The author believes that procurement regulation is invalid, to the extent it makes an exception for contract controversies “subject to” the Claims Act, as an interpretation beyond the clear authority given by the Procurement Act. The only reason apparent to the author for such a provision is to reiterate that contract controversies, as governed by the Procurement Act, involve controversies between a contractor and the government, and that a controversy involving any other party (not a contractor) acting in reliance on a contract must come under the Claims Act. The author finds it hard to envision how any such other controversy would arise in any practical sense, but should it, the Claims Act would prevail.

(5)

If, indeed, the Claims Act prevails, only a Claims Officer could settle and resolve such contract disputes. (See, 5 GCA §§ 6201 and 6206.)

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:

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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).)

b.

Where mutual agreement does not result in a resolution to the government’s satisfaction, it will 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)

c.

If the government does not promptly issue a decision, the contractor 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)

D.

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.” That is patently wrong and without legal authority. There is no precondition to a prompt decision.

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.

Appeals 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).)

2.

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).)

3.

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

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procedure and form would substantially mirror solicitation protest procedure.

XX.

Getting paid, or not, as the case may be A.

Prompt Payment Act (5 GCA § 22501, et seq.). That’s the official title, not reality. 1.

2.

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).)

b.

Interest shall be computed at the same interest rate assessed on unpaid income taxes owed by taxpayers. (5 GCA § 22503(b).)

c.

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).)

d.

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).)

e.

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).)

f.

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 year’s interest, which ain’t much ado about anything and does absolutely nothing to assure prompt payment.

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 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.

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5 GCA § 22504(a).) b.

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.

2.

C.

D.

If you’re willing to take pennies on the dollar for your marginal contract profits, here’s your chance.

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.

This rate is currently 6% and this authority for interest is not limited to one year.

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.

2.

This is another empty remedy, with plenty of limitations and little practical utility. Promise them anything, but give them a page.

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, expectation damages may be awarded”.) 1.

A full review of the Government Claims Act is beyond the scope of this paper. See generally, 5 GCA § 6101, et seq.

2.

The claim 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”.

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XXI.

XXII.

Public enforcement of unauthorized procurement spending A.

Guam taxpayers have standing to bring suit against improper spending.

B.

“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.)

C.

“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.)

D.

“The court shall award reasonable costs and attorney’s fees in favor of the taxpayer and resident who brings suit under this Chapter, against any defendants found liable under this Chapter.” (5 GCA § 7112.)

E.

“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=s fees will not be allowed.” (5 GCA § 7115.)

The Courts A.

This paper will not venture into the bailiwick of the courts, insofar as matters of procurement are concerned. But, as has already been noted, for the Aggrieved Person, there are many advantages to be had to taking an Appeal, first, to the Public Auditor rather than the courts.

B.

5 GCA § 5425(e) indicates protest decisions may be taken to the Public Auditor, and 5 GCA § 5480 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 to make it optional whether to appeal a protest decision to either the OPA or the Superior Court.

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However, 5 GCA § 5481(a) restricts the filing of any such action until 14 days after receipt of “a final administrative decision”, and 5 GCA § 5425(f) says an OPA decision is final unless appealed to the Superior Court under § 5480. That language, and the general notion of exhaustion of administrative remedies, indicates that no such action should be commenced at the Superior Court unless it has been first administratively determined by the OPA. C.

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).)

D.

It must also be remembered that Decisions and Rulings of the courts pre-empt or over-rule the Decisions of the Public Auditor, and provide their own unique contributions to the body of Guam Procurement Law.

E.

At present, there has only been one OPA Decision finally determined by the Superior Court, and that 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 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 have been taken and are at present pending, as noted in the Public Auditor’s 2008 Public Report, page 14 (http://www.guamopa.org/docs/2008AnnualReport.pdf ). One of those pending 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.

F.

The explicit language of 5 GCA § 5707 is a bit confusing to the author, referring to appeal procedures to be conducted pursuant to chapters and articles of law that are inconsistent with the Compiler’s codification. It is also permissive, saying an appeal may be taken to the Superior Court, which does not expressly pre-empt the writ of mandate procedure under the Administrative Adjudication Law. It will likely be the case that some guidance will be necessary from the Court to determine the proper means by which to seek review of an OPA Decision, and whether there are procedural or substantive advantages to one course of action over another.

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XXIII. 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, with all due respect. 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.

2.

3.

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. Appeal and Agency Report were filed. Unfortunately for students of Guam procurement, the appeal was withdrawn without explanation and the case dismissed.

OPA-PA-06-002, In the Appeal of Far East Equipment Company, LLC (vs PAG) a.

This case involved an apparent multi-step bid 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 agency’s material changes to the bid, and the agency’s failure to communicate answers and changes to all bidders.

b.

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.

OPA-PA-06-003, In the Appeal of RadioCom (vs GSA for Office of Homeland Security) a.

This case went all the way through hearing and Decision, so this is the Public Auditor’s first Decision.

b.

This was an appeal of a sole source procurement. The contractor prepared the specifications, and GSA accepted, and incorporated in its own determination, without question, the contractor’s and OHS’ assessment that the supplies were incompatible with other equipment, justifying the sole source procurement. The procurement was funded from Federal funds.

c.

The Decision held that

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4.

(1)

the Procurement Act controlled notwithstanding the use of Federal funds.

(2)

the specifications did not include any reference to compatibility, and the compatibility argument was manufactured after the fact to justify sole source.

(3)

the CPO must monitor specifications and make an independent assessment of 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”.

OPA-PA-07-002, In the Appeal of Emission Technologies, Inc. (vs GPA) a.

Discussion of the 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.

b.

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 bidder who had not been determined to be the best 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 Court disagreed with the OPA’s 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.

d.

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

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whether that tolled the appeal filing time, but found that the appeal to OPA was timely anyway, so we didn’t 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.

5.

e.

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 offeror’s 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.

f.

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 offeror’s price and the 15% local preference differential is determined.

OPA-PA-07-006, In the Appeal of Great West Retirement Services (vs GovGuam Retirement Fund) a.

6.

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 there has been a determination that its best and final offer is not fair and reasonable.

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 résumés and proof of a Guam business license in the bid envelope as mandated renders the bid non-responsive. In this case that was, indeed, the holding. While that case was distinguished and discussed in the context of the J&G Construction appeal which held the IFB cannot convert matters of responsibility into issues of responsiveness, there was an additional element worth mentioning.

b.

This case involved, also, the requirement that the bidder, or a

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bidder’s 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. c.

7.

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.”

(2)

“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.”

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.

b.

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.

c.

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.

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d.

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]”. 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 believes that is a standard whose application is too vague and uncertain to enforce, or for an agency to judge.

(2)

Note also that § 5211 deals specifically and only with Competitive Sealed Bidding. Thus, § 5211(g) only applies to award by Competitive Sealed Bids, so this wage limitation on awards would not appear to apply to other methods of source selection, the most obvious one being RFPs for professional services.

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.

f.

Furthermore, 5 GCA § 5803 identifies Guam DPL 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

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soliciting agency and the contractor. g.

8.

9.

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”.

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.

b.

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 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.

d.

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.

e.

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).

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

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negligible so does not prejudice other bidders.).

10.

b.

The Decision noted the minimal difference between Appellant’s low bid product and the specifications but did not critically dispute the agency’s determination of non-responsiveness based on its own judgment of materiality of Appellant’s deviation from specifications.

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 bidder’s item is superior to another, but only to determine that a bidder’s offering is acceptable as set forth in the [IFB].” (2 GAR § 3109(n)(3).)

d.

Second, compare this to the O&M Energy appeal mentioned above (OPA-PA-08-004) where the Public Auditor very carefully scrutinized the agency’s 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.

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 Appellant’s 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.

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b.

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.

c.

The Public Auditor found the bid clearly only sought equipment (not equipment and supplies), so the low bid was responsive.

d.

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 outside the scope of the automatic stay. This ends up in the author’s 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 wasn’t one) and general policy statements. (1)

f.

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.

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.

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g.

11.

12.

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.

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.

b.

The take-away from this decision is that the Public Auditor is deferential to a determination of the agency’s 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.

c.

Note, in comparison to subjective judgmental evaluations of RFPs, in evaluating an IFB, where price consideration is concerned, “[t]hose criteria that will affect the bid price and be considered in evaluation for award shall be objectively measurable.” (5 GCA § 5211(e).).

OPA-PA-08-008, In the Appeal of Latte Treatment Center, Inc. (vs DMHSA) a.

This is the most recent Decision by OPA since this paper last published, decided February 26, 2009. 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.

b.

The agency argued the Appellant could not be an “aggrieved offeror” because it substantively lacked an essential professional license to perform the work, therefor the OPA lacked jurisdiction to hear the appeal. Note that this is a requirement for binging the protest in the first instance, and not a direct requirement for bringing an appeal. More substantively, though, this argument puts the

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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 Guam’s Procurement Laws and Regulations relating to DMHSA’s 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.

(2)

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 don’t 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.

(3)

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.

(4)

This discussion is not intended to be idle nit-picking. This 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 Guam’s 14 day period). There, the agency held that the Protestant’s

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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 Appellant’s 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 aggrieved”on the day it received notice of award to another bidder., without more.

ii)

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.”

iii)

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 that another bidder got the award, it may not have known how it was aggrieved, but “it certainly knew that it was aggrieved.”

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(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.

(c)

In the CNMI case, the Public Auditor’s 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, as discussed above.

ii)

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.

(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.

(e)

Note that the CNMI regulations do not have the explicit sanctions for filing frivolous or disruptive

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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 Auditor’s 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. (f)

13.

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.

OPA-PA-09-002, In the Appeal of Teal Pacific, LLC (vs GPSS) a.

As with its prior appeal (OPA-PA-08-010), Appellant’s appeal was dismissed when the Public Auditor recused herself, 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 Auditor’s belief those relationships would not prejudice her actions in the matter.

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INDEX OF PERTINENT DECISIONS, APPEALS and AUTHORITIES

Appeal of Island Business Systems & Supplies (v NMC), CNMI OPA, Appeal No. BP-A057, Decision on Request for Reconsideration dated March 11, 2009. . . . . . . . . . . . . . . . . . . . . 66, 114 Competitive Negotiation, Second Edition, Ralph C. Nash, Jr., John Cibinic, Jr., and Karen R. O’Brien, The George Washington University, Law School Government Contracts Program.. 11, 12, 29, 34, 43, 46 Executive Order 2000-25, Relative to Obtaining On-Island Professional Consulting, Education and Training Services before Off-Island Professional Consulting, Education and Training Services... . 13, 17 Fleet Services, Inc. v. Dept. of Administration, 2006 Guam 6. . . . . . . . . . . . . . 22, 42, 45, 49, 111 Formation of Government Contracts, Third Edition, John Cibinic, Jr., and Ralph C. Nash, Jr., CCH/ Wolters Kluwer, The George Washington University Law School Government Contracts Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35, 68, 107 Guam Imaging Consultants, Inc., v. Guam Memorial Hospital Authority, 2004 Guam 15 . . 17, 23, 66, 74 In the Appeal of Advance Management, Inc., OPA-PA-07-008.. . . . . . . . . . . . . . . . . . . . . . 41, 107 In the Appeal of Captain, Hutapea and Associates, OPA-PA-08-009. . . . . . . . . . . . . . . . . . . . . 112 In the Appeal of Dick Pacific Construction Company, Ltd., OPA-PA-07-007. . . . . . . . . . . . 34, 106 In the Appeal of Emission Technologies, Inc., OPA-PA-07-002. . . . . . . . . . . . . . . . . . . 12, 34, 105 In the Appeal of Far East Equipment Company, LLC, OPA-PA-07-010. . . . . . . . . . . . . . . . . . . . 109 In the Appeal of Far East Equipment Company, LLC, OPA-PA-08-001. . . . . . . . . . . . . . . . . . . . . 85 In the Appeal of Far East Equipment Company, LLC, OPA-PA-06-002. . . . . . . . . . . . . . . . . . . . 104 In the Appeal of Great West Retirement Services, OPA-PA-07-006. . . . . . . . . . . . . . . . . . . 47, 106

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In the Appeal of Guam Publications, Inc., OPA-PA-08-007 .. . . . 20, 29, 36, 58, 63, 65, 71, 73, 94, 95 In the Appeal of J&G Construction, OPA-PA-07-005. . . . . . . . . . . . . . . 29, 32, 34, 36, 75, 79, 106 In the Appeal of JMI Medical Systems, Inc., OPA-PO-07-011.. . . . . . . . . . . . . . . . . . . . . . . 28, 110 In the Appeal of Latte Treatment Center, Inc., OPA-PA-08-008.. . 9, 10, 32, 37, 66, 69, 80, 83, 93, 112 In the Appeal of Mega United Corp., OPA-PA-09-001. . . . . . . . . . . . . . . . . . . . . . . . . . . 65, 75, 82 In the Appeal of O&M Energy, S.A., OPA-PA-08-004. . . . . . . . . . . . . . . . . . . . . . . . . . . 31, 78, 110 In the Appeal of Oceania Collection Services, OPA-PA-08-006. . . . . . . . . . . . . . . . . . . . . . . . . . 45 In the Appeal of Pacific Security Alarm, Inc., OPA-PA-07-009.. . . . . . . . . . . . . . . . . . . . . . 27, 109 In the Appeal of RadioCom, OPA-PA-06-003. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104 In the Appeal of Teal Pacific LLC, OPA-PA-08-010.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 76, 85, 116 In the Appeal of Teal Pacific, LLC, OPA-PA-09-002. . . . . . . . . . . . . . . . . . . . . . 13, 75, 76, 85, 116 In the Appeal of the Debarment of Rex International, Inc., OPA-PA-06-001. . . . . . . . . . . . . . . 104 In the Appeal of Town House Dept. Stores, Inc. dba Island Business Systems and Supplies [IBSS vs GSA], OPA-PA-08-012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18, 55, 67, 73 In the Appeal of Town House Dept. Stores, Inc., dba Island Business Systems and Supplies [IBSS vs GPSS (2)], OPA-PA-08-011. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50, 55, 57, 66, 76, 95, 103 In the Appeal of Town House Dept. Stores, Inc., dba Island Business Systems and Supplies [IBSS vs GPSS (1)], OPA-PA-08-003. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72, 75, 78 In the Appeal of Town House Dept. Stores, Inc., dba Island Business Systems and Supplies [IBSS vs UOG], OPA-PA-06-004.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 J&B Modern Tech v. GIAA, Guam Superior Court, CV 0732-06 (Findings of Fact and Conclusions of Law, Elizabeth Barrett-Anderson, June 25, 2007). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26, 27, 80 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). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23, 28, 56, 67, 68, 74, 79 Pacific Security Alarm, Inc. v DPW, Guam Superior Court CV 0591 - 05 (Decision and Order, Stephen Unpingco, August 14, 2006). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76, 77 Guam Procurement Process Primer Ver 1.6 © John Thos. Brown 2009

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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). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109 Sumitomo Construction, Co., vs. Government of Guam, Guam Superior Court CV 1589-99 (Decision and Order, Michael J. Bordallo, May 18, 2000). . . . . . . . . . . . . . . . . . . . . . . . . . 97, 101 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) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13, 34, 73, 75, 76, 103, 105

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