Breaking Free From“We’ve always done it that way”

Virginia Association of Governmental PurchasingLynchburg, VirginiaMarch 22, 2007

Walter ErwinStephanie SuterCity of LynchburgThomas R. FolkReed Smith LLP703-641-4294tfolk@reedsmith.com

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City of Lynchburg revision of procurement ordinance, documents, procedures

Legal basis

Practical legal considerations

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ALTERNATIVE POLICIES AND PROCEDURES AND IMPLEMENTING REGULATIONS UNDER THE VIRGINIA PUBLIC PROCUREMENT ACT

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While the Virginia Public Procurement Act (“VPPA”) generally applies to public bodies, the General Assembly’s stated intent at Va. Code §2.2 -4300C is that individual public bodies enjoy broad flexibility in fashioning details of competition

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VPPA allows certain public bodies to develop “alternative policies and procedures” while mandating that some VPPA requirements still apply. Va. Code §2.2-4343(A)(10) & (11)

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VPPA also allows public bodies to adopt “implementing ordinances, resolutions or regulations.” Va. Code §2.2-4302

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Alternative Policies and Procedures

1 - Who may have them? Who may not have them? Va. Code § 2.2-4343A 10 & 11

- Who may have them - Counties, cities, towns, school boards

- Who may not have them- Anyone else, including authorities

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2 - What may they cover?

- All but what in Va.Code § 2.2-4343A 12. This includes claims procedures!

3 - What provisions of VPPA remain mandatory?

- Those specified in Va. Code § 2.2-4343A 12, which include ones on use of competitive sealed bidding for construction, competitive negotiation for professional services, prequalification, brand names, employment discrimination, mistake-in-bid, retainage, no-damage-for-delay clauses, bonds, and ethics

Alternative Policies and Procedures(cont’d – 1)

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4 - What limiting principles apply for alternative policies and procedures in lieu of non-mandatory VPPA provisions?

‘based on competitive principles”

“generally applicable to procurement of goods and services by such governing body and its agencies”

Alternative Policies and Procedures(cont’d – 2)

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Implementing Regulations Versus Alternative Policies and Procedures

“This chapter [i.e., the VPPA] may be implemented by ordinances, resolutions or regulations consistent with this chapter . . . .”

Va. Code Section 2.2-4302 (emphasis added)

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Implementing regulations and alternative policies and procedures are two different things.

Implementing regulations must be consistent with VPPA. Alternative policies and procedures need not be consistent with non-mandatory provisions of VPPA that they replace

May have both in same ordinance

Implementing Regulations Versus Alternative Policies and Procedures

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Use of Alternative Policiesand Procedures—Claims

Claims fertile area for public bodies such as counties and school boards

-- Can give better definition and tighter application of written notice of claims requirements

-- Can require submission of claims earlier, rather than 60 days after final payment

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An Example Where Alternative Policies and Procedures Made A Difference In Claims

Spotsylvania County adopted purchasing ordinance that required written notice of claim by contractor within 10 days of occurrence of event giving rise to claim

This differed from VPPA requirement at Va. Code § 2.2-4363 (formerly Va. Code § 11-69) to give notice “at the time of occurrence”

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Claims Example (continued)

Contractor on water plant project made 106 claims for over $8 million

Because of purchasing ordinance’s express 10-day time limit, it became easier for County to show lack of timely written notice

As a result, 93 of 106 claims were dismissed following a plea in bar hearing as untimely. MCI Contracting, Inc. v. Spotsylvania County, 62 Va. Cir. 375 (Spotsylvania Cir. Ct. 2003)

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Claims Example (continued)

In contrast, if no expressly stated time period, law would imply a reasonable time, which is a question of fact

More difficult for public body to win on technical defense, such as lack of written notice, if issue becomes one of fact as to what is reasonable time

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Additional Areas to Addressin Alternative Policies and Procedures for Claims

What is a “claim”

What is manner in which written notice of intent to make a claim must be made

What is an “occurrence” that triggers the requirement for written notice

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Alternative Policies and Procedures

What is a “claim”

Not defined in VPAA

Not defined by Virginia Supreme Court

Define in alternative policies and procedures

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What Satisfies Requirement That Contractor Given Written Notice of Intention to Make Claim?

Two 2001 Virginia Supreme Court decisions muddy the waters. Welding, Inc. v. Bland County Serv. Authority, 261 Va. 218 (2001); Dr. William E.S. Flory Small Business Development v. Commonwealth, 261 Va. 230 (2001)

If state with specificity in alternative policies and procedures, can restore clarity

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What Is An “Occurrence”

Not defined in VPPA

2001 Welding, Inc., decision by Virginia Supreme Court tends to muddy waters

Public body benefits from clarity

If state with specificity in alternative policies and procedures, can restore clarity

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Use of Alternative Policiesand Procedures (continued)

OTHER FERTILE AREAS

1. Increase simplified small purchase procedures threshold to above $50,000 (e.g., $100,000)

2. Reduce remedies on nonresponsibility challenges

3. Tighten bid protest procedures

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Adoption of ImplementingProcedures for Mandatory Provisions

Public bodies should also consider implementing procedures for some mandatory VPPA provisions

-- suspension and debarment

-- prequalification

-- automatic incorporation of required clauses into contracts

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City of Lynchburg Revisions As A Case Study

Why?

What done?

How done?

Results?

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Conclusion

Questions?

Discussion?