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Best Value Procurement for Highway Construction: Legal Issues and Strategies (2023)

Chapter: IV. EFFECTIVELY IMPLEMENTING BEST VALUE PROCUREMENT

« Previous: III. POTENTIAL ISSUES CREATING RISK OF PROTESTS IN THE BEST VALUE PROCUREMENT PROCESS
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Suggested Citation:"IV. EFFECTIVELY IMPLEMENTING BEST VALUE PROCUREMENT." National Research Council. 2023. Best Value Procurement for Highway Construction: Legal Issues and Strategies. Washington, DC: The National Academies Press. doi: 10.17226/27175.
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Suggested Citation:"IV. EFFECTIVELY IMPLEMENTING BEST VALUE PROCUREMENT." National Research Council. 2023. Best Value Procurement for Highway Construction: Legal Issues and Strategies. Washington, DC: The National Academies Press. doi: 10.17226/27175.
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Page 31
Page 32
Suggested Citation:"IV. EFFECTIVELY IMPLEMENTING BEST VALUE PROCUREMENT." National Research Council. 2023. Best Value Procurement for Highway Construction: Legal Issues and Strategies. Washington, DC: The National Academies Press. doi: 10.17226/27175.
×
Page 32
Page 33
Suggested Citation:"IV. EFFECTIVELY IMPLEMENTING BEST VALUE PROCUREMENT." National Research Council. 2023. Best Value Procurement for Highway Construction: Legal Issues and Strategies. Washington, DC: The National Academies Press. doi: 10.17226/27175.
×
Page 33
Page 34
Suggested Citation:"IV. EFFECTIVELY IMPLEMENTING BEST VALUE PROCUREMENT." National Research Council. 2023. Best Value Procurement for Highway Construction: Legal Issues and Strategies. Washington, DC: The National Academies Press. doi: 10.17226/27175.
×
Page 34

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30 NCHRP LRD 90 vidual member’s ratings, particularly where consensus scoring is used. However, before disposing of such materials, the agency should consult with legal counsel since state law may require the agency to maintain such information. Another issue agen- cies should consider is whether they are permitted or required under state law to redact the identity of the individual evaluators when disclosing materials pursuant to open records laws. IV. EFFECTIVELY IMPLEMENTING BEST VALUE PROCUREMENT is section provides information and strategies that trans- portation agencies can use to reduce the risk of proposer complaints and formal protests for best value procurement. Information and strategies for procurement approaches, evalu- ation processes, RFP provisions, and enabling statutes and regu- lations are included. Table 13 lists various strategies employed to help reduce the potential for bid protests relating to best value procurements, as reported by the surveyed transportation agencies. In general, the agencies believe that focusing on transparency, fairness, clear communication and consistency with respect to the pro- curement, as well as the use of consensus scoring, assist in re- ducing the risk of objections and challenges. A. Procurement Approaches Best value procurements involve greater complexity in proposal submittals, evaluations and selection than low bid procurement, increasing the potential for errors in the process that may open the door to protests or complaints. To avoid or re- duce the potential of bid protests, the best value approach used by the transportation agency must strictly adhere to the agency’s policies and information provided to proposers. Deviating from such rules and policies opens the door for legal issues to arise. e following measures are useful in avoiding such problems: • Adhere to the policies and rules in place in using best value procurement. • Strictly adhere to the procurement process required by the RFP and law, including state legislation. Following the pro- cess keeps the procurement consistent and transparent to the proposers. • Adhere to the evaluation manual. Certain details regard- ing the evaluation and selection procedure will likely be included in an evaluation manual or other document not provided to the proposers. While these details are not bind- ing on the agency, the manual should establish a process for deviations to avoid allegations regarding improper motives for changes in such procedures, such as requiring written justication for the deviation and sign-o from the con- tracting ocer responsible for the procurement. • Standardize RFQ and RFP documents. Using program- matic RFQ and RFP documents will enhance the evalua- tion team members’ understanding of the process as they participate in multiple procurements, making deviations from procedures less likely, with the understanding that of Administrative Hearings did not overturn the school board’s decision, the opinion admonished the school board, stating its “appointment of someone so overtly biased towards one appli- cant, in no small part, led to this protest in which the School Board nds itself embroiled. A more prudent approach for the School Board to avoid the appearance of and the opportunity for favoritism and secure fair competition upon equal terms to all bidders might have been to designate more disinterested or neutral individuals to conduct the short-listing, applicant inter- views, scoring, and ranking.” e court also found the numer- ous communications in the midst of the procurement process between the successful proposer, School Board members and sta expressing frustration with the evaluation committee’s nal ranking were problematic. e court found the successful bidder “plainly attempted to take advantage of his past access to and friendship with certain School Board members and sta to continue to campaign for this contract … [and] used his rela- tionships with the School Board members and sta to exploit an advantage not readily available to other applicants.” A 2016 protest before the Court of Federal Claims relating to an FHWA procurement81 concerned a best value procurement for an engineering and technical services contract to support re- search activities at an FHWA structural testing facility. is was the third protest relating to the same procurement. In response to the rst protest, GAO agreed with the protester (PSI) that the proposal submitted by the selected proposer (Genex) failed to comply with technical evaluation criteria applicable to a key person on the team (the project manager or PM). A second pro- test regarding a re-evaluation process undertaken by the agency was also sustained by the GAO. e protest before the claims court concerned the agency’s proposed new corrective action to amend the solicitation to change the duties and required qualications for the PM and re-solicit proposals, rather than re-evaluating the proposals using the originally published cri- teria. e protester alleged that FHWA abused its discretion and acted arbitrarily, capriciously, and contrary to law by taking such action. e court reviewed the administrative record, nd- ing that it did not include any justication for the modication in the criteria and furthermore noting that the revisions relieved the PM of certain critical management responsibilities without transferring them to anyone else. e decision also found it rel- evant that one of the evaluation committee members had issued a minority report relating to the award recommendation aer the rst corrective action, disagreeing with the majority’s rec- ommendation to once again select Genex. e court sustained the protest and enjoined FHWA from proceeding with an evalu- ation using the revised criteria. Another issue that agencies should consider is what pro- cedures should be adopted regarding collecting and disposing of individual team members’ materials that are produced dur- ing the evaluation. Many agencies consider such information irrelevant to the overall scoring decisions and dispose of any materials prepared by individual members that reect the indi- 81 Professional Service Industries, Inc. v. United States, 129 Fed. Cl. 190 (2016).

NCHRP LRD 90 31 Table 13. Strategies Used by Transportation Agencies to Reduce or Eliminate the Occurrence of Protests Transportation Agency Strategies Used to Reduce or Eliminate Bid Protests Arkansas Use of consensus rating to eliminate extremes in scoring. California 1) Better procurement documentation. 2) Develop standard criteria to evaluate bids and maintain consistencyacross bids. 3) Additional training for evaluators. Colorado Ensure that contract documents and evaluation materials are in nal form before evaluations commence. Ensure that the evaluating team bears in mind steps they can take to increase defensibility against arguments that the selection process involved arbitrary or capricious decisions, technical leveling, and bartering. Florida Development and use of an Alternative Contracting Task Team (ACTT) and an Alternative Contracting Task Team Steering Committee (ACTT SC). Both teams provide a forum for discussions between Florida DOT and contractors (Florida Transportation Building Association) relating to perceived issues with alternative contracts. Idaho Be transparent and fair. Maine Emphasis on a fair evaluation process and strict adherence to the evaluation/scoring process rules. Maryland Ensure consistency in communications with dierent proposers in light of laws/regulations requiring a high degree of condentiality regarding communications with proposers. Massachusetts Conduct training, be transparent and fair, and keep condentiality. Michigan Provide evaluation criteria and general scoring methodology for industry comment in advance of RFQ. Minnesota Transparency (e.g., release all comments on proposals), careful evaluator selection, consistent oversight, and consensus scoring. Missouri 1) Partnership with industry, continuous communication, and collaboration. 2) Selecting appropriate evaluation team members. 3) Ensuring the integrity of the process is a top priority. 4) Training and educating 5) Being as transparent as possible. MTA of Harris County, TX Evaluation Team members sign “No Conict of Interest” forms and are trained on evaluating and not sharing or discussing information with anyone. Nevada Communicate the process to the industry, and strict adherence to the process. North Carolina Transparency and consistency. Ohio Agency-retained expert to assist in creating evaluation documents. Clear and honest discussions of evaluation processes with proposers before initiating procurement. Debrief and explanation of score results with submitters. Release of scoring documents aer award with all parties. Oregon Follow the prescribed procurement processes faithfully. Utah Follow established processes and procedures. Texas 1) Capture lessons learned for training purposes. 2) Be more transparent on scoring, including points assigned toeach category. 3) Provide more details in debriefs. Virginia 1) Consensus evaluation and scoring. 2) Yearly training. 3) Oversight from an experienced ProcurementManager throughout the procurement. Wisconsin Technical Review Committee includes non-DOT personnel. Wyoming e process must be consistent and the same every time an RFP is done. the documents and evaluation procedures will be subject to adjustment to address lessons learned and account for the specics of a project. • Develop the award algorithm and evaluation criteria for projects in coordination with transportation agency sta and industry partners. Some state transportation agencies work with AGC and state transportation industry con- tractor boards to enhance transparency and ensure that concerns regarding the fairness of evaluation criteria and award procedures are discussed and resolved in advance of putting them into practice. • When changes are made to the agency’s standard best value procurement process, internal agency sta and industry partners should be involved in developing justiable revi- sions that improve the best value procurement approach. • Clear communication and transparency in all aspects of the best value approach are critical. Information must be communicated unambiguously and consistently to all pro-

32 NCHRP LRD 90 —If the document draing process results in changes to legal provisions, ask the legal team to review those changes for consistency with the intent. e same con- cept applies for technical and nancial provisions. —Use compliance checklists as tools to ensure that state and federal legislative and other requirements are prop- erly addressed in the documents. —Review the proposal submittal requirements from the proposer’s perspective. Will the proposers understand what they are being asked to provide? Are there submittal requirements associated with each evaluation criterion? It may be helpful to ask a contractor to put a proposal outline together based on a review of the instructions. (e contractor obviously would be precluded from pro- posing and would be required to sign a condentiality agreement.) —Conduct pre-proposal conferences and post-evaluation debriengs to obtain proposer input regarding any issues, including ambiguities, in the RFP package. —Oer proposers the opportunity to ask and obtain answers to questions. In some cases, the number of ques- tions may be overwhelming, in which case the agency will need to develop procedures to respond as appropriate. • Develop ATC procedures, describe ATC requirements and procedures in the RFP, and take appropriate steps to ensure the condentiality of information provided. Ensure that re- sponses to ATCs are clear, reect the agency’s willingness to accept the alternative, and address any requirements that must be met to incorporate the ATC in the proposal. • Clearly indicate whether a stipend will be paid and under what conditions. • Conduct training to provide guidance to evaluation partici- pants, assure evaluators understand the project goals and objectives, develop consistency among the evaluation team, and identify measures to be implemented to avoid the ap- pearance of bias. Lessons learned and protests from previ- ous projects should also be reviewed with the team. Table 14 identies the approach to training used by the agencies surveyed. • Ensure that the procurement documents clearly dene the contracting concepts. is entails communicating clearly to proposing rms the important aspects of the project the agency is focusing on to help reduce selection process un- certainty. Agencies need to avoid reusing irrelevant evalu- ation criteria from previous projects that do not align with the project goals. • Use prequalication/shortlisting to make “responsibility” determinations up front, either as the rst step in a two-step procurement process or the initial action following receipt of proposals in a one-step process. is step can include pass/fail criteria such as years of experience in a certain area of relevance to the project, previous projects experience and quality levels, and others. However, such criteria used must be justiable. posers, and all relevant information must be provided to all proposers equally. e transportation agency must adhere to the evaluation and award system in place and be consis- tent, fair, and unbiased to all proposers. • Condentiality is important during the best value procure- ment process to avoid sharing one proposer’s proprietary information with others, with the understanding that the agency may be required by law to share certain informa- tion with others (for example, 4(f) solutions per the Design- Build Rule). Conversely, once the process is concluded, it is important for information regarding the evaluation pro- cess and selection decision to be available to all proposers. Although debriengs are not required, they can be useful in maintaining relations with the unsuccessful proposers and ensuring that those proposers are in a position to do better on subsequent procurements. • Utilize SMEs and tools to obtain the benet of lessons learned from prior procurements and make sure that the current procurement is handled correctly and contracted properly. • Strategically select projects that will use best value procurement. Use agency sta and allow the industry to provide input on projects that may benet from best value procurement. • Ensure the procurement process is well documented, in- cluding communications with proposers, evaluations and justications for evaluation and award decisions. Consider involving industry in the development of fair and transparent procedures, sometimes even by including profes- sional organization representatives on the evaluation team, to ensure a transparent and fair process with industry buy-in. A number of the agencies surveyed partner with industry in developing procurement documents and procedures. For ex- ample, TxDOT formed committees with TxDOT and AGC representatives to revise its programmatic best value procure- ment documents, including submittal requirements, evaluation process and criteria, as discussed in Section C. B. Proposal Requirements and Evaluation Strategies Even though best value procurement has inherent chal- lenges and legal issues, various strategies may be implemented to improve transparency and fairness while allowing the agency the exibility to make decisions that are in the best in- terest of the public. ese include: • Assure that all team members responsible for developing the RFP or following the procurement process and proce- dures described in the RFP are not subject to conicts of interest. • Promote clarity in RFP draing: —Assure that RFP draers understand the project goals and objectives and dra documents carefully to avoid ambiguities, inconsistencies, etc. It is helpful to have the legal team review technical and nancial provisions and the technical and nancial draers review the legal pro- visions. e teams then exchange comments to help iden- tify potential areas requiring rewriting.

NCHRP LRD 90 33 Table 14. Best Value Procurement Training Provided for the Evaluation Team Transportation Agency Best Value Procurement Training Provided Arkansas Training meeting held prior to evaluation. California Before beginning the evaluations, the facilitator explains the scoring process to the evaluation team, describes the bids received, goes over the evaluation process, etc. During evaluations, the facilitator periodically reviews the evaluation criteria with the team to ensure they follow the criteria as they evaluate the proposals (i.e., ensure consistency in evaluating all the bids). Colorado Require all evaluators to be trained on the approved project-specic evaluation manual. Florida Extensive training on scoring criteria and evaluation. Idaho A workshop is conducted before the evaluation to ensure everyone is on the same page. Maine e scoring team meets to review scoring criteria and how each criterion should be evaluated. ey are required to acknowledge scoring rules and condentiality rules and sign an agreement. Maryland Specic training held before the submission of the SOQs and Technical Proposals on each project put on by the procurement management team. Massachusetts Conduct training and go over the procurement and ATC process. Michigan DB training. Minnesota DB program manager goes over evaluator responsibilities and how to rate the proposals. Missouri Internally developed training on process, do’s and don’ts. Includes project background information, goals, criteria, etc. Montana Technical review committee training is conducted on all projects. Nevada e PM develops an evaluation and selection plan which outlines the process, how to score and evaluate the proposals, adjectively scoring, and the consensus process. New York State We provide training on criteria, methodology, etc. Evaluations tend to line up with expertise. North Carolina Recently began the training process that consists of a PowerPoint presentation to discuss roles and responsibilities, as well as the condentiality component. Ohio Project-specic training for evaluation provided by central oce procurement. A manual is dened and followed for the process. Oregon A brieng is held. Members are selected based on having extensive construction or engineering-related experience. Tennessee When the individual evaluation team members are determined, an introductory meeting is used to discuss the RFQ and then the RFP. Texas Review of RFP requirements, goals, scoring matrix, and example scenarios. Discuss the use of critical thinking in the evaluation of proposals. Training is mandatory for evaluation team members regardless of previous experience. Virginia Annual training, pre-evaluation meeting and pre-evaluation certication requirement. Washington, D.C. e rules are discussed and set specically by legal representative. Wisconsin 2-hour kick-o meeting. Administered by the Owner’s Representative for the project. Includes project overviewand scoring system/methodology. Wyoming Conduct multiple meetings to discuss the process or the next steps. Note: SOQs = Statements of Qualications.

34 NCHRP LRD 90 e Washington State Department of Transportation’s (WSDOT’s) DB Manual82 provides information regarding mea- sures WSDOT has implemented to ensure that the RFP docu- ments and evaluation materials are put together properly, and accurately reect its intent and steps to ensure that the evalua- tion process is fair, equitable and transparent. C. Approach to Development of RFQ and RFP Provisions An eective strategy employed by a number of transporta- tion agencies to reduce protest risks for their best value procure- ments is the development of standard RFQ and RFP provisions that communicate the procurement procedures to proposers and are used program-wide by the agency. Careful develop- ment and updating of programmatic documents help assure that the agency implements a best value procurement process that reduces or eliminates the potential for bid protests and complaints. For example, TxDOT83 has been going through an intensive review of its procurement documents, including extensive dis- cussions with AGC representatives regarding requirements that are viewed as problematic by the contractor community. While engaging with industry to address contractor concerns, each agency will need to ensure that its documents are consistent with applicable state and local requirements, agency policies and procedures, the project goals and objectives, and various project-specic requirements. D. Best Value Procurement Enabling Statutes and Regulations As discussed in the 2006 best value report, several states have used the ABA’s Model Procurement Code as the basis for their procurement legislation.84 e Model Code allows the incorpo- ration of best value concepts into the procurement process for all qualifying procurements by permitting the use of a competitive sealed proposal process. For both Model Code and non-Model Code states, legislation permitting the use of best value has ex- panded signicantly since the publication of the 2006 report, and almost all states now permit the use of best value for alter- native delivery, with some also allowing best value procurement for DBB projects. e statute chart in Appendix A provides a snapshot of these laws, but the reviewer should consult with counsel regarding specic laws as the chart merely summarizes information contemporaneously available to the authors based on an internet review and does not constitute legal advice. As can be seen from Appendix A, enabling authority for best value procurement varies signicantly from state to state. 82 Available for download at https://www.wsdot.wa.gov/publications/ manuals/fulltext/M3126/DBM.pdf. 83 Programmatic templates, including RFQ, RFP and DB contract documents, can be downloaded from https://www.txdot.gov/inside- txdot/division/alternative-delivery/division-resources.html. 84 Scott supra note 5 at S-3 and Appendix B. • Use pass/fail requirements to determine the responsiveness of the proposals received, in addition to qualitatively rating dierent components of the proposal and clearly identify- ing them in the RFP. One strategy is to require a minimum technical rating to be considered responsive, or to include an “upset price” with price proposals over that amount considered non-responsive but potentially eligible to par- ticipate in discussions and revised proposals. • Develop reasonable evaluation criteria with enough detail so proposers can easily respond to them, and the evaluation team can easily evaluate and score the proposals. —Provide clear details on the award algorithm used and how each proposal will be rated. Include all quantitative formulas or equations and the scoring totals for all evalu- ation criteria. Discuss the qualitative factors and how the proposals are rated against those factors in the evaluation process and ultimately in the selection determination. —Provide relative weightings for evaluation criteria and major subfactors. If a particular evaluation factor is heavily weighted, it should probably have subfactors. —Consider how the proposal evaluation process will be organized and ensure that the proposal is organized in a way that facilitates the evaluation process. • Assure that the evaluation team bases the evaluation on the criteria listed in the procurement documents, using the pro- cess described in the RFP, and does not add any new criteria to the list. • Conduct a systematic analysis and comparisons of price and technical criteria consistent with the RFP provisions regarding the criteria and their relative importance. Pro- vide the evaluators with forms that match the evaluation requirements and criteria set forth in the RFP. Check to make sure the forms are properly completed and support the recommendations made. • Conduct debriengs (through meetings or in writing), if requested by the proposing rms, to further explain the rationale for the selection decision, discuss the strengths and weaknesses of the proposal submitted by the proposer being debriefed, and promote transparency. Make sure that information required to be made available under open records laws will be maintained and available if requested. • Assure that all evaluation team members are not subject to conicts of interest. • Identify an individual responsible for oversight of the eval- uation and scoring process, to assure that the individual team members’ evaluations are done fairly and appropri- ately. is individual can be an agency employee, another public employee, a consultant, or an individual nominated by the local contractor association or board (e.g., AGC). • Include legal counsel as a part of the best value procurement team to make certain internal procedures are followed, team members are trained, and the best value procurement process is properly documented, including any communi- cation or discussions with proposers.

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Best value procurement is becoming more popular with transportation agencies because it allows them to consider factors other than cost. However, best value procurement is also more complex and can lead to protests if not conducted properly.

NCHRP Legal Research Digest 90: Best Value Procurement for Highway Construction: Legal Issues and Strategies, from TRB's National Cooperative Highway Research Program, addresses the best value procurement systems used for highway projects and notes the flexibility regarding selection criteria, rating systems, and award algorithms.

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