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Tips on Bidding on Public Contracts III

April 29, 2019

 

 

 

This is the third article in this group...

 

Disclaimer: The following information does NOT constitute legal advice and is only for general educational purposes.  Each situation is different and specific legal issues usually require additional research and investigation, so do not rely on this article to address a particular legal issue; use this as a starting point to gain a general understanding.  This article, although educational in purpose and substance, nevertheless, might be deemed attorney advertising, and prior results do not guarantee future success.

 

Introduction

 

It occurs to me that some of you might be confused about the difference between Responsive vs. Responsible Bidders. It’s easy to confuse this, so let’s talk about it. Selected?

 

Generally, bidders are often selected on the basis of who is the *lowest* *responsive* *responsible* bidder. These are three moving parts. Miss any of these, and you’re out of this bid. Maybe even future bids.

 

Lowest Price

 

Lowest, of course, means the lowest price.

 

Usually people think of this in terms of price per product, like if we order 100,000 boxes of staples, is the price a $1, 10 cents or 1 cent per box of staples. However, this can apply to the provision of services as well. For example, there could be a bid for window washers, and the bids could be evaluated on the basis of price for washing ten 8x8 panes per hour, or a price per typical six story building (and they may list the buildings in question, and it’s up to you to survey the buildings before submitting a response), or the agency may estimate it’s 1,000 hours of window washing, etc.

 

Keep in mind, many times there is a floor of wages you must pay. I’m not talking about your state’s minimum wage law. That’s actually a lot lower. In many governments, public projects often require what’s called the Prevailing Wage. For instance, federal agencies often go by the federal Bacon-Davis Act wage requirements. In New York, there is a different prevailing wage for “Public Work” construction work versus “Building Service”

 

Prevailing Wage can be substantially more than minimum wage, or even the private sector wage of what you could pay for the same worker. It’s generally calculated on the majority of the average rate paid to a particular labor classification. So, if the majority of those surveyed in ABC County are paid $50/hour, that becomes the prevailing wage for the municipality in that county. However, this largely depends on those surveyed, such as unions. If true unfettered free enterprise were permitted, there would be no artificial “prevailing wage.” Prevailing Wage typically only applies to public jobs, not private ones.

 

Responsive

 

New York State Finance Law, Section 163, defines a “Responsive” bidder as “a bidder or other offerer meeting the minimum specifications or requirements as prescribed in a solicitation for commodities or services by a state agency.”  In other words, a bidder with the requisite experience, who complied with the minimum requirements of whatever is in the request for a bid.

 

So, assume there is a bid request for someone to create a website for the Department of Important Affairs, and it requires a bidder to have at least two programmers each with three years experience designing websites, and the bidder must provide proof of at least four jobs, each of was for at least $5,000 in fees. Then the bidder must provide all that proof to the agency requesting the bid. Some of the proof might include resumes, references for past jobs, cancelled checks and copies of old contracts, or whatever the agency needs to verify the alleged experience of the proposed bidder.

 

Responsible

 

New York State Finance Law, Section 163, defines a “Responsible” Bidder as a bidder with “the financial ability, legal capacity, integrity, and past performance of a business entity and as such terms have been interpreted relative to public procurements.”

 

I can’t really say it better than this, so I’m just going to repeat the guidance of the New York State Office of State Comptroller:

 

“The courts, in examining vendor "responsibility," have indicated that "responsibility" is "an elastic word," encompassing factors including financial ability to complete the contract, accountability, reliability, skill, sufficiency of capital resources, judgment, integrity and "moral worth. Whether a business entity is "responsible" is a question of fact to be determined on a case-by-case basis. Based upon existing legal precedents, responsibility determinations can and should involve a review of the following four major categories:

 

1. Does the business entity possess the integrity to perform the contract? Factors to be considered include criminal indictments, criminal convictions, civil fines and injunctions imposed by government entities, anti-trust investigations, ethical violations, tax delinquencies, debarment or suspension by a government entity, prior determinations of integrity-related non-responsibility, etc.

 

2. Has the business entity performed at acceptable levels on other government contracts? Factors to be considered include reports of less than satisfactory performance, early contract termination for cause, contract abandonment, court determinations of breach of contract, etc.

 

3. Is the business entity legally capable of performing the contract? Factors to be considered include authority to do business in New York State, licensing (e.g. with the Education Department or Department of State), debarment by the State Labor Department due to a prevailing wage violation, etc.

 

4. Is the business entity financially and organizationally capable of performing the contract? Factors to be considered include assets, liabilities, recent bankruptcies, equipment, facilities, personnel resources and expertise, availability in consideration of other business commitments, existence of appropriate accounting and auditing procedures for control of property and funds, etc.

 

The courts have also recognized a protected constitutional due process liberty interest in connection with a determination of non-responsibility. Therefore, prior to finding a contractor non-responsible, the state contracting entity must offer the "safeguards of reasonable notice and timely opportunity to be heard." This does not require a full evidentiary hearing. Rather, written notice, together with an opportunity to rebut the concerns over the vendor’s responsibility, either in writing or at a meeting with the contracting entity, would appear to be sufficient (see suggested process to be followed below).

 

In other words don’t be a thief, crime doesn’t pay, don’t lie, cheat or steal. Also, make sure you have sufficient cash on hand to support your operations - all of them - do you have the correct licensing to perform the job, have you ever messed up any other government contracts.

 

A finding of Non-Responsibility can bar you from public contracting for a long time. So, you definitely want to avoid this.

 

Summary

 

To win a bid, generally you must be the lowest price, be capable of performing the work requested (Responsive), and be of high integrity with sufficient financial resources (Responsible).

 

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