A Rhode Island court decision recently used the phrase "legalistic straightjacket" in an opinion that demonstrated judicial sensitivity to the challenges procurement officials face in making decisions. This article looks at recent bid protest cases that illustrate how far courts go to preserve the discretion exercised by procurement professionals.

Courts exercise great care in injunctions against awards

The "legalistic straightjacket" phrase has been a part of the Rhode Island bid protest lexicon since 1970. The phrase was used again in a 2005 bid protest case involving two health care plan providers vying for the state's business. [Blue Cross & Blue Shield of Rhode Island v. Najarian, 865 A.2d 1074 (Rhode Island Supreme Court, 2005)] In Blue Cross, the trial court had sustained a protest against the award and issued an injunction against the execution of the contract. The Supreme Court reversed, noting that while the contract award perhaps was not handled perfectly (at least partly because the department was understaffed), nevertheless a "fair and open bid process was conducted in good faith, and we must afford a presumption of correctness to the State's decision. Any mistakes made during the process simply do not rise to the level of palpable abuse of discretion." To hold otherwise, the court reasoned, "would place the Judiciary in the position of litigating the award of every state and municipal contract and would place public officials in charge of awarding such contracts in the ‘legalistic straightjacket'."

This court decision illustrates the great care taken in overturning award decisions. In the author's experience, courts are reluctant to overturn executive agency decisions without clear evidence that a substantial error was made.

The proper exercise of discretion has limits

Two 2012 cases illustrate other courts' views of the range of discretion. In Ohio, an evaluation committee determined that an offeror proposing on the Columbus Airport Authority's baggage handling system was not responsible. [Glidepath, LLC v. Columbus Regional Airport Authority, 2012 Ohio 20 (Ohio Court of Appeals, 2012)] The court upheld the determination, finding the responsibility analysis comprehensive. The airport's finance director was a member of the evaluation committee. Financial statements and Dun & Bradstreet reports were analyzed. The committee also considered reports about late payments to subcontractors and evidence that the company had limited project management experience. The court concluded that it would not substitute its judgment and would "presume that the Airport performed its duties in a lawful manner … [The Airport] made qualitative determinations regarding Glidepath's resources, capacity, and overall ability to perform the project. Based upon our review, the Airport's responsibility determination was supported by logic and reason."

Still, sometimes the process looks otherwise to a court. A Virginia court decision considered the fact that different reasons were given during debriefings for the protester's not winning the contract. [Professional Building Maintenance Corp. v. School Board of County of Spotsylvania, No. 110410 (Virginia Supreme Court, 2012)] In that case, the county held two post-award meetings with the vendor. As the court saw the meetings, the first emphasized a weakness in the company's environmentally preferable purchasing program. In the second meeting, according to the court's findings, the county raised different reasons for the company's not being successful: issues of responsibility, problems with the plan for transitioning from the incumbent contractor, and concerns about the method of conducting background checks. The justices found that the award decision was arbitrary and capricious.

On the other hand, a New Jersey case illustrates the common deference given to procurement professionals' decisions to cancel solicitations. [A&A Industrial Piping, Inc. v. County of Passaic, A-4902-10T4 (New Jersey Supreme Court, 2012)] In A&A, bids had been received for upgrades to the heating, ventilation, air conditioning, and fire protection systems for the county jail. A&A protested the intended award to the low bidder on various grounds, including the fact that the apparent awardee was not prequalified by the county to perform structural steel or HVAC work. The county realized it inadvertently had omitted prequalification of contractors in the solicitation terms and conditions. The county cancelled the solicitation. A&A sued.

The court sustained the county's decision, agreeing with the trial court judge that the county did not abuse its discretion in determining that it needed to rebid the project to ensure that only prequalified contractors worked on the project. The court reasoned that the county's cancellation and re-solicitation decision put potential bidders on an equal footing - ensuring that they had a common understanding of the qualification requirements. "[T]here can be no judicial declaration of invalidity in the absence of clear abuse of discretion," the court concluded.

Putting the best face on procurement decisions

Judges do not want to second-guess procurement decisions. Still, they have a responsibility - like procurement professionals - to safeguard equity and integrity in the process.

In the bid protest context, courts generally defer to procurement decisions if they are not arbitrary and capricious. "Arbitrary" and "capricious" are terms that suggest there was no considered judgment: decisions were made on a whim without analysis, reasoning or application of standards.

Remember that local laws, ordinances, or policies may have specific requirements, but here are approaches that help courts understand how discretion was properly exercised in a contract award:

Document key decisions. If your statutes or ordinances refer to "findings" or "determinations," courts look for memoranda that document key decisions. Even if laws do not require written determinations, the procurement file should "tell the story." Remember that the first impression of disappointed bidders, their counsel, and courts is gained from the procurement file. Include brief memoranda that recite the rule and explain the rationale for key decisions like rejection of bids that are not responsive, correction of bid mistakes, waivers of minor irregularities, and determinations that bidders are not responsible.

Brief evaluation members about the importance of following the process and the fact that their evaluation comments will be subject to review by disappointed bidders (in many if not most states). Better yet, on complex requests for proposal (RFP) projects, use an evaluation plan that clearly aligns with the RFP's evaluation language.

Be on the lookout for evaluation comments or documents that do not make sense. For example, wide variations in past experience evaluations from poor to outstanding can be a red flag during a company's review of the procurement file. An evaluator's strike-out, change, and "reconsidered after discussion" comment helps show considered judgment. Numerical scores (if used) don't have to be identical - evaluators can disagree about application of criteria - but unexplained, unexpected variations can raise questions. Make sure that evaluators talk about wide initial evaluation disparities and that the procurement file shows that they did.

Use a succinct evaluation memorandum that tracks the RFP language and summarizes the strengths of the winning offer. Highlight why the winning proposal won using RFP evaluation factors as the guide. If an offer wasn't as strong in one area, say so. It shows a balanced evaluation. (Said another way, don't just let the spreadsheet - if you use numerical ratings — speak for itself entirely. People decide. Spreadsheets don't!)

Be prepared for RFP post-award debriefings and have one person lead the discussion. We owe industry (who often spends a lot of money and time developing proposals) an explanation about how they can improve proposals. Some states (and the federal government) require debriefings by law under certain circumstances. An inconsistency between a debriefing and the procurement file puts a chink in the armor of court deference to procurement professional discretion.

Files should deserve deference

Your state laws will vary, but in my experience the court decisions in this article illustrate common themes nationally. If your experience differs significantly, talk with your counsel about why.

NIGP has given you the tools to tell a compelling procurement story in your procurement file that should convince a court not to put you in a "legalistic straightjacket."

At NIGP Forum this year, think and talk about the special role that procurement professionals play in fostering an equitable, effective and efficient public procurement system. Do the decisions in your procurement files deserve the deference that courts often give them?

Richard Pennington, CPPO, C.P.M., J.D., LL.M. is an NIGP Individual Member and NIGP Instructor. He served as an assistant attorney general (procurement and contract law and litigation) and State Purchasing Director for the State of Colorado. He retired from the practice of public procurement law in 2010.