Contract competition always matters

Robert J. Sherry

Two recent cases'one involving procurement procedures and one involving a contract award'give advance warning about the information technology buying challenges that you will likely face this year.

The first case was a challenge to Iowa's procedures for selecting computer training contractors. Certain state agencies traditionally had procured these services using essentially noncompetitive contracts awarded by another agency. The awarding agency periodically let one-year computer training services contracts, then renewed them on a year-to-year basis without competition.

A vendor challenged this procedure in state court. It asserted that state law requires agencies to buy computer training services competitively because the services are 'items of general use.'

Both the trial and appeals courts upheld the state's noncompetitive buying practice. The courts noted that many states exclude professional services from competitive bidding. The appeals court added that 'the selection of professional services may turn on subjective elements that are not susceptible to formulation in the bidding process.'

But the courts' conclusions are wrong. Many federal and state agencies use detailed evaluation criteria'such as vendor personnel, management skills and past performance'for professional services buys. The courts either ignored or lacked a basic understanding of these standards.

A Florida court decision reflected better reasoning. In that case, a vendor protested the lottery commission's award of a lucrative contract for automated gaming systems and related services. The request for proposals stated that a six-person evaluation committee would review the bids.

Two vendors responded. The committee evaluated the proposals and scored them using a stated formula. The losing vendor protested, and an administrative judge concluded that certain aspects of the evaluation and scoring failed to comply with the scheme outlined in the RFP. The judge ordered the committee to re-evaluate the proposals.

In the second round, the committee picked the same winner. Another protest and administrative evaluation followed.

The disappointed vendor then turned to a state court. This time the protester contended that because some of the committee members had testified in the initial administrative protest, they should not have re-evaluated the proposals. The court wisely rejected this contention because there was no evidence of bias by the committee members.

This decision is sound. A contrary decision would have set a precedent encouraging disappointed vendors to file repeated protests until they get a sympathetic evaluation.

Robert J. Sherry is a partner in the law firm of McKenna & Cuneo LLP. He heads the government contracts practice in the firm's San Francisco office, counseling information technology companies on federal, state and local issues.

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