Problems to Avoid in Department of General Services Procurements

Each year, hundreds of vendors clamor to do business with the State of California by way of the public contract or procurement process. While many State agencies have the authority to enter certain types of contracts on their own, the Department of General Services, Procurement Division, administers bids for large State projects, especially in the area of high tech, data storage and management, and related matters.

Through the years, Simas & Associates, Ltd. has been fortunate enough to represent a number of bidders seeking contracts with the Department of Motor Vehicles and Bureau of Automotive Repair, California Highway Patrol, and Department of General Services. While the concepts behind the competitive bid process have remained the same, the procedures have changed over the years.

Alternative Bid Protest Procedure

In 1998, the Department of General Services, Office of Administrative Hearings, adopted new regulations located in Title 1, California Code of Regulations, Sections 1400, et seq. These alternative bid protest regulations provide for an expedited protest, response, and hearing. One of the main purposes of these regulations is to expedite resolution of bid protests so they do not drag on in litigation and tie up state projects.
Whether under these new alternative bid protest regulations, or the old system of bid protesting, bidders often discover in the middle of a heated bid protest contest that they should have done things differently, raised issues earlier, and that it may be

Top Five Problems to Avoid in Bid Protest Cases

The following are the top five problems observed in bid protest cases.

  1. Burden of Proof of Protestant—Alternative bid protest regulation Section 1426 provides that the protesting party must demonstrate how it would have been selected as the winning vendor should the arbitrator or administrative law judge grant its protest.
    This is a very difficult burden of proof unless the protestant either has a high enough overall score on their bid submittal (e.g. second place), or the protestant is able to disqualify everyone ahead of it. Either way, the protestant must demonstrate by a preponderance of the evidence that a competing vendor who is the intended awardee failed to comply with the law, the request for procurement (“RFP”), or has somehow failed to respond to the bid requirements. Under the new regulations, if a protesting bidder cannot demonstrate this, its protest may be dismissed.
  2. Protest early and often.—While the requirements of many RFPs can vary wildly, and can include different protesting procedures, bidders often find themselves in surprise situations when the Department of General Service makes its final selection and disqualifies the bidder for some reason.
    Any bidder interested in bidding on a large-scale RFP should retain legal counsel immediately to advise them along the way. Once an award is made and the protests begin, it is often too late to object to: (1) unclear or impossible specifications in the RFP; (2) changes to the RFP and addenda; (3) disparate treatment of another vendor; or (4) failure to ask questions or for clarifications during the process of bid compilation as the RFP usually permits.
    Creating a record of objections, questions, and overall compliance with the bid process during the procurement, will more easily enable an unsuccessful bidder to maintain a meritorious protest in the end or will create a better record for the intended awardee to defend itself. Far too many times vendors discover this too late in the process.
  3. Watch for errors in your response.—While RFPs often score proposals in different ways, use different scoring system in weighting, and have different requirements, the common theme in procurement is that a bidder’s written proposal must be “responsive” and cannot contain any “material deviations” from the RFP. Regardless of the vendor’s ability to do an outstanding job in performing a contract, a proposal that has errors in it, even typographical ones, or that otherwise does not commit entirely to the exact specifications requested, can be disregarded by the Department of General Services as “non-responsive.”
    While the Department of General Services has some discretion to overlook non-significant typographical errors and other things, there are some mandatory requirements where even an innocent mistake will cause a vendor to be totally disqualified. And when the mistake is in writing and has been submitted as the vendor’s proposal, it is very hard to run from such an issue at a subsequent hearing or legal challenge. Accordingly, it is imperative that the proposals are technically correct, free of error, and easily understandable.
    Again, bidders should consult experienced legal counsel on this issue.
  4. Plan for litigation during the procurement process.—Experienced vendors know when the competition will be fierce for a contract, especially one worth millions of dollars. It is important to consider who else will be bidding and what the competitor’s track record is in both protesting bids and defending awards.
    For example, a small company preparing a proposal for many millions of dollars could face industry giants with enormous resources and experience in post-award litigation. For this reason, it is important to evaluate the likelihood of post-award litigation and bid protests in advance in addition to hiring legal counsel in advance to evaluate and document all of the potential issues that could arise during litigation.
  5. Watch out for maintenance or ongoing service component.—The very nature of public contracting and procurement is the secret and confidential submission of multiple bids, some of which qualify and are selected at a “cost opening.” Once the cost opening occurs, the competitive component of procurement is severely diminished as the cost opening is public.

More and more RFPs in State procurement contracts, especially in high tech industries, incorporate specific levels of maintenance and post-award service. Bidders must use caution in analyzing the level of service and factoring in the cost component that providing such service at the minimum required levels will cost. Many bid protests center around how bidders price their service and whether or not they are responsive to committing to certain service levels. This is the source of an increased number of protests. Many of the things a bidder must prepare for are not obvious in the honeymoon stage of responding to an RFP.
Good planning, thorough compliance, and sound experienced legal advice will prove themselves to be invaluable should a protest erupt or the intended awardee find itself having to defend against three protests at one time. For these reasons, we recommend adopting the five steps contained in this article and that you contact the experienced procurement attorneys at Simas & Associates, Ltd. to assist you.