This article is an excerpt from The Art of Tendering: A Global Due Diligence Guide, which is available for purchase.
The Office of the New York State Comptroller has a well-established track record of regulating the evaluation and award decisions of public institutions in New York State. As the following cases illustrate, those institutions remain accountable for defending their evaluation decisions against legal challenge and face the possible nullification of contract awards that are made pursuant to flawed evaluations.
In its March 2001 decision in US Filter Operating Services, the Office of the New York State Comptroller ruled that a low bid award by the Department of Correctional Services in a wastewater treatment plant services Request for Proposals (RFP) breached the state procurement guidelines and finance law. As the decision noted, the rules required that services be evaluated for “best value” (generally meaning price and other technical factors). The Comptroller found that “without considering the technical merit of all proposals, we cannot say which proposal offered best value. Therefore, this competitive process was not conducted in accord with the law.” The award was rejected and a new tender ordered.
In its December 2002 decision in Republic Services of New York d/b/a Upstate Disposal, the Office of the New York State Comptroller ruled that the State University of New York’s low bid evaluation in a solid waste removal services RFP breached the procurement rules since it failed to disclose that the required “best value” assessment would be conducted on price alone. As the Comptroller stated, the solicitation “did not describe the method of award or the relative importance or weight of cost in its determination of best value and, therefore, did not satisfy the requirements of State Finance Law.” The contract was therefore ruled invalid.
In its February 2006 decision in Group Health, Inc., the Office of the New York State Comptroller struck down a contract award by the Department of Civil Service after finding that the winning bidder submitted non-compliant pricing. The bid dispute involved an employee drug benefits plan RFP that required guaranteed percentage discounts for named and generic drugs, including specialty drugs. However, the selected bidder’s proposal did not offer the required percentage discount for specialty drugs. It was therefore held to be non-responsive to a material requirement of the RFP. The contract award was therefore returned unapproved.
Likewise, in its June 2007 decision in Tailwind Associates, the Comptroller upheld a complaint against the Office of Children and Family Services (OCFS) over the use of different evaluators to score different proponent references. The dispute involved an RFP for IT service standby agreements. The Comptroller stated that the rules require “the same individual (or group of individuals) conduct and score all the reference checks. Otherwise, the scoring of the reference checks may be distorted based on the individual biases of the particular evaluators conducting the reference checks or because one may tend to score higher generally than another evaluator.” The Comptroller found that the OCFS:
…utilized multiple evaluators for the references, but provided that each individual reference to be scored was contacted only by a single member of the reference evaluation team, and only that person scored the proposer with respect to that reference. This approach created an inherently unfair and unbalanced scoring methodology, since it resulted in individuals, with apparently very different scoring philosophies, scoring different references – creating the very real possibility that the outcome of this procurement was determined by which evaluator scored one or more of a particular proposer’s references.
The resulting contract awards were therefore rejected.
Similarly, in its January 2008 decision in Touro Contracting Corporation, the Comptroller found that the State University of New York listed ten years required prior experience in its public advertisement but included less onerous requirements in its actual Invitation for Bids (ITB). As the Comptroller stated, a potential bidder that could have performed the work but did not have the 10 years experience required in the notice “would have reasonably concluded that it was not qualified to bid on the project and would not have requested the actual bid specifications.” It therefore rejected the contract award and ordered a re-tender.
In its October 2010 decision in Computer Aid, Inc., the Office of the New York State Comptroller rejected a contract award by the Office for Technology due to a flawed price evaluation. The dispute involved an RFP for over 850 IT staff support positions. Pricing was divided into a one-time placement fee and ongoing hourly rates. The evaluators weighed the two categories equally, which meant that they were only evaluating one hour of the hourly rates instead of assessing the cost for the thousands of hours of actual work required for each position and therefore disproportionately weighting the one-time placement fee in the overall cost assessment. Since this failure to assess actual costs impacted the evaluation rankings, the Comptroller rejected the contract award.
Furthermore, in its August 2011 decision in Biltwel General Contracting Corp., the Comptroller rejected a Department of Environmental Conservation contract award due to vague experience requirements. The solicitation stated that the Department would examine and evaluate “the bid as responsive by considering the contractors understanding of: the overall project scope, estimated cost, utilization of proposed sub-contractors and expertise in completing similar contracts.” The Comptroller ruled that this failed to properly specify the minimum experience requirements. The contract award was therefore rejected.
Shortly thereafter, in its February 2012 decision in LMGI, Ltd. And Summit Security Services, Inc., the Comptroller found a series of significant evaluation errors in a medical fraud investigation services RFP issued by the New York State Office of Medicaid Inspector General, Division of Medicaid Investigations (referred to in the decision as OMIG). These errors included the inconsistent interpretation and application of scoring instructions when assessing bidder prior experience, second-language capabilities, and experience testifying in court. While some remediation measures were apparently discussed during the process, the evaluation record did not indicate whether they were actually implemented.
In its decision, the Comptroller stated that the award methodology must be balanced and fair and based on transparent factors that are consistently applied:
A fundamental principle of section 163 of the State Finance Law (and, indeed of the State’s competitive bidding laws generally) is that the award of contracts be based upon a balanced and fair process. This requires that the award methodology, both as designed and as applied, must be balanced and fair. Here, however, our review shows many errors and inconsistencies in the scoring of the proposals. It also appears that the evaluation teams did not fully understand how to properly execute the scoring methodology and, even upon re-review of the scoring sheets by each evaluator as directed by OMIG, errors remained in the final scoring. This raises the additional questions of whether OMIG failed to properly instruct the evaluation teams and also whether at least some of the evaluation criteria, as stated, were too vague to be applied consistently.
The Comptroller also stated that criteria must be clear and scored based on reasonable conclusions:
We recognize that evaluators, in reviewing subjective criteria, may, and frequently do, reach different conclusions and assign different scores. Furthermore, this Office will generally give significant deference to the technical judgments made by agencies particularly with respect to matters within their expertise. However, the process must demonstrate that: 1) the scoring system itself was clear and reasonably developed in a manner designed to arrive at best value; and 2) the evaluators, in assigning scores, arrived at reasonable conclusions. Here, we cannot say that these standards were met.
The contract award was rejected for not meeting these due process standards.
As these cases illustrate, evaluation irregularities can, and often do, lead to the termination of the resulting contract awards. Public institutions should therefore exercise a high degree of due diligence in their evaluations since running a proper evaluation process in the first instance is preferable to having a contract award voided and being required to re-evaluate prior bids or re-tender to seek new bids.
