What’s wrong with Pennsylvania’s IT solicitation process?

What’s wrong with Pennsylvania’s IT solicitation process?

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By William W. Warren, Jr., Esq.

The Commonwealth’s procurement of information technology (IT) services and equipment is a source of recurring difficulty. Contrary to the views of many state administrators, the issue is not whether there are too many bid protests. Given the great fear on the part of IT vendors of adverse consequences associated with protesting (whether that fear is real or imagined), in my view there are not enough protests and challenges effectively testing the adequacy, propriety, and sometimes the wisdom of IT procurements. The issue as I see it is whether there are sufficient numbers of qualified vendors willing to weather the rather harrowing processes, risks, and great expense of preparing proposals. At stake is the credibility of and confidence in state IT procurement. Indeed, although discussed here in the context of IT services and equipment, the same point can be made across-the-board for Commonwealth procurement of all services, commodities, equipment and construction.

First, the “seven-day rule” as it is commonly called, must be applied with greater circumspection, interpreted in a manner that does not foreclose legitimate inquiry, and waived when necessary. Secondly, bid protests must be handled, not as a litigation game, but as a method of airing doubts about the propriety of the procurement, the decisions of the involved officials, and the like. We need to change the rules and practices that prevent IT vendors and contractors from getting answers to their questions.

The “seven-day rule,” set forth in the Commonwealth Procurement Code of 1998 and as interpreted by Commonwealth attorneys, has been applied with undue inflexibility, barring potentially valid protests and in any event preventing a complete airing of the issues. If this rule is not satisfied, the protest is dismissed and the merits either are not determined or are given inadequate attention. Vendors want to know what happened substantively; a dismissal on this procedural ground suggests to vendors that the state is hiding behind an unfair rule of mere procedure.

The “seven-day rule” in actuality consists of two separate components: It is commonly understood that bidders, offerors, and prospective contractors have seven days to file a protest, measured from when the vendor knew or should have known of the protest’s grounds. The 1998 Commonwealth Procurement Code, 62 Pa. C.S. §1711.1(b) provides, in pertinent part, that

. . . the protest shall be filed with the head of the purchasing agency within seven days after the aggrieved bidder or offeror or prospective contractor knew or should have known of the facts giving rise to the protest.

I call this the first seven-day period for the filing of a protest.

However, subsection §1711.1(b) continues, again in pertinent part, providing that “. . . in no event may a protest be filed later than seven days after the date the contract was awarded.” This second, seven-day period could have easily been five days or 10. The drafters of the Commonwealth Procurement Code created this second, seven-day period as an absolute bar to any protest by a disappointed bidder. Here, there is clear intent to create a final and very inflexible deadline for action. Can the same be said for the Code’s first, seven-day period?

What seems to attract little attention, perhaps because both periods are seven days in duration, is that it is only the second seven-day period that is explicitly inflexible, hard and fast. By way of contrast, the first seven-day period is triggered by a “knew or should have known” standard. There is nothing inflexible or rigid about a standard of this nature. While the second seven-day period has to be inflexible in order for procurements to proceed in a timely manner, it makes considerably more sense, putting aside the tactical advantage an inflexible approach provides to the agencies, for the Commonwealth to think twice before applying the first seven-day period to bar a protest.

Application of the first seven-day period should instead be flexible. For example, there is no reason to compel vendors to protest an RFP within seven days of its issuance if the RFP includes a question-and-answer process which could resolve the issue. The state’s interest is in avoiding a delay in a procurement; unnecessarily and prematurely filed protests create delay. Why adopt a policy that encourages interference in the solicitation process prematurely?

Moreover, knowledgeable Commonwealth counsel know how reluctant vendors are to raise objections. If anyone doesn’t know this, let me tell you: there is great reluctance. Vendors hold off filing until circumstances force them to take action. But merely because this procedural objection can be raised by agency counsel does not mean it should be.

There is no reason to use the first seven-day period to bar necessary, legitimate, and I respectfully suggest helpful inquiry into the solicitation process. Which is preferable from the standpoint of the citizens of the Commonwealth: successful avoidance of a necessary inquiry through aggressive use of this defense, or the securing of answers to legitimate questions raised in the course of a solicitation process? The question answers itself. When a serious question has been raised, applying the first seven-day period rigidly is a mistake. In order for vendors to participate on an on-going basis in Commonwealth procurement, they require honest answers to important questions. What they often get instead is a defend-at-any-cost reaction that is short-sighted and self-defeating.

It would be better to look at the application of the first seven-day period with a measure of flexibility. Was it absolutely certain that the problem could have been identified when the RFP was issued, when the amendment or addendum was received, or when the question during Q&A was answered? Most potential problems arise in a factual matrix that is somewhat complex. Close questions should be called in a way that favors the securing of answers to legitimate questions. Stated another way, agencies should be required to apply the “knew or should have known” standard according to the facts presented.

Even where there is neither doubt nor ambiguity as to whether a matter could have been raised at an earlier time, it often would make perfect sense to permit the protest to be heard on the merits, and the objection based upon the seven-day period, waived. The solicitation process may not have reached the point where proposals are due. Even if proposals have been received, the tactical objection can be waived so that serious questions can be answered. Waivers are allowed in contexts too numerous to mention. Constitutional rights can be waived. Courts can allow time periods to be extended, both before and after a deadline. Courts also treat seemingly mandatory legislative commands as merely directory instead.

The benefit to Commonwealth IT procurement from changing the current policy to one of flexibility regarding the first seven-day period would be substantial. Such a change would benefit the Commonwealth through greater vendor confidence in decision-making and higher levels of vendor participation.
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ENDNOTES

1. Reluctance to disclose documents relevant to the issues involved in a protest is an example of litigation gamesmanship. A full discussion of that issue can be found in the original article.
2. Thinking twice and being flexible in applying the “knew or should have known” standard does no violence to the Commonwealth’s sovereign immunity in my view. The legislature waived sovereign immunity when the standard was created. What remains is for the standard to be applied in accordance with the circumstances presented in a particular case.
3. Post-bid debriefings have not been shown to solve this problem. Often if not always, debriefings are limited to matters within the vendor’s own proposal. Operating from instructions from agency counsel or as a matter of policy, agency officials say so little that the debriefings often fail to inform to a degree sufficient to reestablish the vendor’s confidence in the Commonwealth’s process. I would like to add to our list of matters that agency counsel can and should address, the unnecessarily paranoid restrictions placed on Commonwealth procurement officials. Telling the truth about a procurement can never be bad. If telling the truth results in more protests, then perhaps more protests are needed.
4. See, e.g., JPay, Inc. v. Department of Corrections, No. 625 CD 2013, Slip opinion at 11 (Cmwlth. Court, April 8, 2014), holding that the 60-day period allowed for rendering a decision under 62 Pa. C.S. §1711.1(f) will not be applied to render an agency decision on a protest announced on the 62nd day invalid. Speaking for the panel, Judge Colins found that, under all the circumstances, the 60-day period was directory, rather than mandatory. There is no reason that this same analysis cannot be applied to instances where the first seven-day period is at issue.

William Warren is Senior Partner in the Harrisburg Office of Saul Ewing LLP, a member of the PBA Government Lawyers Committee, a past Chair of the Dauphin County Bar Association’s Government Law Section, a former Chief Counsel at the Department of General Services and Chief of Litigation in the Office of General Counsel. Warren counsels school districts and local governments in construction matters and state technology vendors and service providers in Commonwealth procurements. The views expressed here are his own. This article has been adapted from a more lengthy article entitled, “What’s Wrong with Information Technology Procurement and What Government Lawyers Can Do About It,” appearing in the Summer 2014 issue of News and Views, the publication of the Pennsylvania Bar Association’s Government Law Section.