Guam Procurement Law Primer v1-6

Procurement Lore or Procurement Law ?

A GUAM PROCUREMENT PROCESS PRIMER(Ver 1.6)

(Both more and less than you will ever want to know)

John Thos. Brown

Attorney at Law

The author, John Thos. Brown is an attorney, licensed on Guam, serving as General Counsel for Jones &1

Guerrero Co., Inc., its affiliates and subsidiaries. The opinions expressed are his own and do not constitute legal advice. This paper began as a short outline, prepared for delivery of an introductory procurement seminar to the Guam Chamberof Commerce Small Business Committee in March 2009. It then took on a half-life of its own. This is Ver 1.6, June 25,2009. The author expects it to be revised periodically as new cases and issues arise. You may contact him to obtain thelatest version at [email protected] .

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A GUAM PROCUREMENT PROCESS PRIMER (Ver 1.6) 1

(Both more and less than you will ever want to know)

CONTENTS

INTRODUCTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

I. SOURCES of Guam Procurement Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

A. The Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

B. The Regulations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

C. Decisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

D. Other jurisdictions, experts, authors, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . 4

E. Lore.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

II. PURPOSES AND POLICIES of Guam Procurement Law.. . . . . . . . . . . . . . . . . . . . . . . . . . 6

D. to provide for increased public confidence. . . . . . . . . . . . . . . . . . . . . . . . 6

E. to ensure the fair and equitable treatment. . . . . . . . . . . . . . . . . . . . . . . . 6

4. Making and keeping “determinations”.. . . . . . . . . . . . . . . . . . . . . . 6

F. to provide increased economy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

G. to foster effective broad-based competition. . . . . . . . . . . . . . . . . . . . . . . 8

H. to provide safeguards. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

I. to require public access. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

J. Policy in favor of planned procurement. . . . . . . . . . . . . . . . . . . . . . . . . . 11

mailto:[email protected]

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K. Policy in favor of local procurement. . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

M. The Procurement Act applies to almost all GovGuam purchases. . . . . . . 14

N. A word from your author. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

3. The Guam legislature chose to forego procurement training and

education when it adopted the Guam version of the Model

Procurement Code. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

III. PROCUREMENT ADMINISTRATIVE STRUCTURE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

A. Centralized Procurement Policy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

B. Policy Office. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

C. GSA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

D. DPW. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

E. Public Auditor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

F. Attorney General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

IV. METHODS OF SOURCE SELECTION.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

Contract renewals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

V. “BID BONDING”. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

VI. COMPETITIVE SEALED BIDDING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

B. The form is always by Invitation for Bids (IFB).. . . . . . . . . . . . . . . . . . . . . 25

C. Distribution, notice and “bidding time”. . . . . . . . . . . . . . . . . . . . . . . . . . 25

D. Withdrawal, cancellation and rejection of all bids. . . . . . . . . . . . . . . . . . 26

E. Bid “mistakes”.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

award goes to the lowest responsible and responsive bidder. . . . . . . . . . . . . . . . . . . . . . 28

G. What is a Responsive Bid?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

H. “Materiality” only concerns “Responsiveness”. . . . . . . . . . . . . . . . . . . . . 30

a. Matters of bidder prejudice. . . . . . . . . . . . . . . . . . . . . . . 30

I. What is a Responsible bidder?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

d. Standards of Responsibility. . . . . . . . . . . . . . . . . . . . . . . 33

h. Inquiry into determination of responsibility. . . . . . . . . . . 36

i. The interesting requirement for a writing .. . . . . . . . . . . . 37

(4) “Qualified Bidder lists”.. . . . . . . . . . . . . . . . . . . . 39

J. A Note on “All or None” bids: Why not take part of me?. . . . . . . . . . . . . 40

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K. Wage Determination issues.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

VII. MULTI-STEP SEALED BIDDING.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

D. The first phase. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

5. Phase two. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

VIII. REQUESTS FOR PROPOSALS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

only allowed for “professional services”. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

IX. UNSOLICITED OFFERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

shall be subjected to the Competitive Sealed Bidding . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

X. SOLE SOURCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

XI. SMALL PURCHASE PROCEDURES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

H. REQUEST FOR QUOTATION (RFQ). . . . . . . . . . . . . . . . . . . . . . . . . . . . 51

I. BLANKET PURCHASE AGREEMENTS (BPAs). . . . . . . . . . . . . . . . . . . . . . 51

XII. EMERGENCY PROCUREMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52

A. Requires an existing “threat to public health, welfare, or safety under

emergency conditions”.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52

C. “Emergency procurements shall be made with such competition as is

practicable under the circumstances”... . . . . . . . . . . . . . . . . . . . . . . . . . . 53

F. LIMITED TO 30 DAY SUPPLY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53

XIII. FEDERAL SUPPLY SCHEDULE PURCHASES MUST ADHERE TO SPECIFIED METHODS OF

SOURCE SELECTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53

XIV. SPECIFICATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55

A. SPECIFICATIONS ARE THE BEDROCK OF PROCUREMENT. . . . . . . . . . 55

C. MINIMUM NEEDS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55

D. UNDULY RESTRICTIVE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56

F. NON-PROPRIETARY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56

I. BRAND NAMES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56

J. BRAND NAME OR EQUAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57

K. The Who and How of specification preparation and use.. . . . . . . . . . . . 57

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6. Procedures for Development of Specifications. . . . . . . . . . . . . . . 58

XV. VARIOUS CONTRACT TYPES, AND THEIR REQUIREMENTS FOR USE.. . . . . . . . . . . . 60

G. Policy Regarding Selection of Contract Types. . . . . . . . . . . . . . . . . . . . . . 61

H. Multi-term contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61

I. Fixed-Price .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62

J. Indefinite Quantity.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62

K. Requirements contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63

L. Leases. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63

M. Options to purchase, renew, extend. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63

N. Multiple Source Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64

1. An Incremental Award is a variety of Definite Quantity. . . . . . . . 64

2. A Multiple Award is a variety of Indefinite Quantity. . . . . . . . . . 64

XVI. PROCUREMENT PROTESTS.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65

B. ONLY “AGGRIEVED” BIDDERS CAN PROTEST. . . . . . . . . . . . . . . . . . . 65

D. TIMING FOR PROTEST FILING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66

1. General Rule: 14 days from knowledge of aggrievement.. . . . . . . 66

4. POSSIBLE EXCEPTION FOR PRE-BID-OPENING ISSUES:.. . . . . . 66

F. Request for Reasons for Rejection of Bid. . . . . . . . . . . . . . . . . . . . . . . . . 68

G. FORMAT OF PROTEST.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70

H. RESOLUTION OF THE BID PROTEST. . . . . . . . . . . . . . . . . . . . . . . . . . . 71

I. Requests for Reconsideration of Protest Decision. . . . . . . . . . . . . . . . . . 73

XVII. THE AUTOMATIC STAY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73

XVIII. APPEALS OF BID PROTESTS TO THE PUBLIC AUDITOR.. . . . . . . . . . . . . . . . . . . . . . . 75

A. Prerequisites of Appeal are Protest and Decision. . . . . . . . . . . . . . . . . . . 75

B. 15 Day Filing Deadline. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75

1. Equitable Tolling.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76

C. Jurisdiction of the Public Auditor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77

5. OPA jurisdiction does NOT include direct review of Ethical

violations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80

D. OUTLINE OF AN APPEAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80

c. CAVEAT: This outline is bare bones.. . . . . . . . . . . . . . . . 81

2. First step, the Notice of Appeal.. . . . . . . . . . . . . . . . . . . . . . . . . . 82

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3. Second Step, the Procurement Record. . . . . . . . . . . . . . . . . . . . . 83

a. Within five (5) days from filing the Notice of Appeal. . . . 83

4. Objections to OPA jurisdiction. . . . . . . . . . . . . . . . . . . . . . . . . . . 84

5. Third Step, the Agency Report. . . . . . . . . . . . . . . . . . . . . . . . . . . 85

b. The Agency Report is meant to be filed ten (10) days after

receiving the Notice of Appeal. . . . . . . . . . . . . . . . . . . . . 85

6. Fourth Step, the Appellant’s Comments on Agency Report. . . . . 85

c. Comments on the Agency Report must be filed within ten

(10) days of the filing of the Agency Report. . . . . . . . . . . 86

7. Fifth Step, the agency’s Rebuttal to Appellant’s Comments on

Agency Report.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86

b. Rebuttals are meant to be filed within five (5) days of filing

the Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86

9. Discovery. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86

10. Role of the Hearing Officer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87

11. The Hearing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88

12. The Decision.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89

E. Dateline flow of simple, ideal appeal. . . . . . . . . . . . . . . . . . . . . . . . . . . . 90

1. Filing of Notice of Appeal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90

3. Agency must file Procurement Record. . . . . . . . . . . . . . . . . . . . . 91

4. Any party must file objections to qualification (recusal) of Public

Auditor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91

5. Agency must file Agency Report. . . . . . . . . . . . . . . . . . . . . . . . . . 91

6. Appellant’s or any Interested Party’s Comments. . . . . . . . . . . . . . 91

8. Notice of Hearing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91

9. Decision. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92

F. Appeal Remedies:. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92

2. Money.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92

3. Other remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93

a. Prior to award. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93

b. Remedies after award.. . . . . . . . . . . . . . . . . . . . . . . . . . . 93

XIX. Some issues relating to contract performance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95

B. Performance Bonding.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95

C. Contract disputes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97

1. Procurement Act or Claims Act?. . . . . . . . . . . . . . . . . . . . . . . . . . 97

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2. Who hears contract disputes?. . . . . . . . . . . . . . . . . . . . . . . . . . . . 97

XX. Getting paid. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100

A. Prompt Payment Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100

1. Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100

2. Discounted settlements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100

B. Non Prompt Payment Act Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101

C. Promissory notes.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101

XXI. Public enforcement of unauthorized procurement spending. . . . . . . . . . . . . . . . . . . . 102

A. Guam taxpayers have standing to bring suit against improper spending.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102

XXII. The Courts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102

XXIII. A review (with commentary and full disclaimer) of some of the OPA Decisions. . . . . 104

1. OPA-PA-06-001, In the Appeal of the Debarment of Rex. . . . . . 104

2. OPA-PA-06-002, In the Appeal of Far East Equipment. . . . . . . . 104

3. OPA-PA-06-003, In the Appeal of RadioCom. . . . . . . . . . . . . . . 104

4. OPA-PA-07-002, In the Appeal of Emission Technologies. . . . . 105

5. OPA-PA-07-006, In the Appeal of Great West Retirement Services

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106

6. OPA-PA-07-007, In the Appeal of Dick Pacific. . . . . . . . . . . . . . 106

8. OPA-PA-07-009, In the Appeal of Pacific Security Alarm. . . . . . 109

9. OPA-PA-07-010, In the Appeal of Far East Equipment . . . . . . . . 109

10. OPA-PA-07-011, In the Appeal of JMI Medical . . . . . . . . . . . . . 110

11. OPA-PA-08-009, In the Appeal of Captain, Hutapea. . . . . . . . . 112

12. OPA-PA-08-008, In the Appeal of Latte Treatment Center. . . . . 112

INDEX OF PERTINENT DECISIONS, APPEALS and AUTHORITIES. . . . . . . . . . . . . . . . . . . . . . 117

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A GUAM PROCUREMENT PROCESS PRIMER(Both more and less than you will ever want to know)

INTRODUCTION:

According to the Spanish historian Carlos Madrid, in his book Beyond Distances (Saipan, NorthernMariana Islands Council for Humanities, 2006), there was an uncommon distress in the MarianasIslands in 1876, brought about by a combination of factors, chiefly Spain’s forcible introductioninto the Islands of hundreds of political and other criminal deportees from Spain, but also typhoonand drought. The situation on Saipan had become particularly dire. As he tells the story (pp. 173-175),

“Chamorros and Carolinians together with the deportees were facing a faminewithout precedent that could bring the island to catastrophe. Martín [the SaipanSpanish authority] wrote Governor Brabo [the Guam-based Governor of the Marianas]with an urgent request for provisions, since in a few days they would literally have nothingto eat. In Guam this request would have been received with great concern as resources inAgaña were also extremely limited. But the situation in Saipan was nevertheless sopressing that Governor Brabo authorized, on his account, the purchase of all thenecessary rice, which was to be sent in the launch San José as soon as possible.

“The obligatory legal procedures, which mandated that government requisitionshad to be contracted through free and open auction, still had to be fulfilled. Thegobernadorcillo of Agaña, following the custom, ordered the prominent display of thenotice announcing the public auction in the busiest areas of the capital. At the same timethe pregonero, or town crier, spread the news in the streets for three consecutive days. Inorder to save time, knowing that in the whole of the Marianas only George Johnstoncould provide the necessary quantities of meat from his leasehold in Tinian, the requestfor the purchases of barrels of cured pork was directly made to his representative VicenteCalvo. The barrels were to be sent to Saipan in the amount of a pound daily perdeportee.

“The conditions of the auction of palay or unthreshed rice were basically to beable to provide dry rice, free of dust and preferably from the last harvest. The miniumquantity for each bid being ten cavanes, it had to be delivered to the Tribunal in Agañawithin forty-eight hours. In return, it was guaranteed that the payment would take placeon the day after delivery, which was an incentive to all who knew that the colonialadministration was a late and often bad customer.

“The auction was held in the government offices on the ground floor of the


Palace, at ten o’clock in the morning of Monday, July 26, 1876. To speed up theprocess, bids were submitted not in writing but vocally. All the bidders must have agreedon a price among themselves before the auction, as everyone offered the same bid of twopesos per cavan.

“The names of the contractors and the amounts they agreed to supply were:

• Don Gregorio Pèrez 210 Cavanes• Don Juan Blas 60 cavanes• Don Andrés de Castro 70 cavanes• Marcelino Sy Pingco 10 cavanes• Demetrio Quitugua 50 cavanes

“The mention of these individuals is very significant since they undoubtedlyrepresented a social class of means, as they had capacity enough to produce on their landsor accumulate sufficient rice to be able to provide in only two days quite large amounts. To be able to provide such quantities implied possession of tracts of land much larger[than] the needs of a regular family required. Alternatively, the bidders had resourcesenough to buy palay from other people. Gregorio Pèrez contracted for more than half ofthe auction quantity, although the documents related to this episode do not reflect if hewas the largest producer or whether he received a favorable treatment on the part of thecolonial authorities.

“What was the social background of these people? How the principalía of thevillages and the capital had the right to use the title “Don” was earlier discussed, but inactual fact many individuals not belong[ing] to the principalía were also referred to as“Don” or “Doña” probably because [of] their social or economic ascendancy. In thiscase, the fact that three of the five successful bidders were termed “Don” does notestablish that Marcelino Sy-Pingco, a Christian Chinese, and Demetrio Quitugua, aChamorro like the rest, were members of the principalía, but that among the majorproducers of rice in Guam were Chamorros of different social backgrounds, as well assome non-Chamorros such as Sy-Pingco.”

Emergency, competitive and sole source procurement, specifications, delivery terms, public notice,collusion, responsive and responsible bidders, law (“obligatory legal procedures”) and lore(“according to custom”): all have long been part of Guam daily life and procurement history.


I. SOURCES of Guam Procurement Law

A. The Law – (Guam Procurement Act: 5 GCA Div. 1, Chpt 5, §§ 5001 et seq.http://www.justice.gov.gu/CompilerofLaws/GCA/05gca/5gc005.PDF) . Codes arecited as “[Title number] G.C.A. [Section number]”, e.g., 5 GCA § 5210.

1. Originally enacted in 1982, becoming effective in October 1983, and majoroverhaul in 1985, adding more MPC, and other tinkering since.

2. Based on Model Procurement Act, but not updated

a. “This Chapter is essentially the Model Procurement Code approvedby the American Bar Association in 1979. A model code is onewhich provides a guide for the jurisdictions which wish to adopt it,but does not require that it be followed precisely. It is different froma uniform code, the latter being intended to unify the laws of thejurisdictions which adopt it. The ABA and the drafters of theModel Procurement Code recognize the wide organizationaldifferences between the states and jurisdictions under the U.S.Therefore, there are many portions of this Model Code which areoptional, or which may be modified. This Act has modified themodel code to suit Guam’s organizational structure and function.Because this Act intends that the Policy Office adopt implementingregulations, Model Regulations are also available, and must beexamined and changed to coincide with the version of this Actactually adopted by the Legislature. The Official Comments to theModel Procurement Code are a part of the Legislative History of thisChapter and, also, may be obtained from the American BarAssociation.” (Official Comment 5 GCA § 5030.)

B. The Regulations – Guam Administrative Regulations (2 GAR Div 4, §§ 1101 etseq.). http://www.justice.gov.gu/CompilerofLaws/GAR/02gar.html (Scroll down toDivision 4, Procurement Regulations, and open each Chapter). Regulations arecited as “[Title] G.A.R. [Section number]”, e.g., 2 GAR § 3116.

1. Based on ABA Model Procurement Regulations.

2. Note some individual agencies have own regulations.

C. Decisions

1. Courts http://www.guamsupremecourt.com/

a. A decision cited in the form “[year] Guam [number]” is a GuamSupreme Court decision, e.g., 2004 Guam 15. It overrides all otherlocal decisions.

http://www.justice.gov.gu/CompilerofLaws/GCA/05gca/5gc005.PDF)

http://www.justice.gov.gu/CompilerofLaws/GAR/02gar.html

http://www.guamsupremecourt.com/


2. Public Auditor http://www.guamopa.org/

a. A decision cited in the form “OPA-PA-xx-xxx” is a Decision of theGuam Public Auditor, where “xx” is the last 2 digits of the calendar year the action is filed, and “xxx” is the chronological order ofactions filed in that year.

b. Click on “Procurement Appeals” at the OPA website to review allappeals ever brought to the Public Auditor, and clicking on“Documents Filed” within an appeal reveals a wealth of interestingargument and examples to form your own appeal.

c. Also note Audit Reports, e.g., General Services Agency, CompetitiveSealed Bidding, Sole Source, and Emergency ProcurementFunctions, Performance Audit, OPA Report No. 04-14, December2004, http://www.guamopa.org/docs/OPA0414.pdf

D. Other jurisdictions, experts, authors, etc.

1. Other Model Code States, e.g., Maryland, Hawaiihttp://www.aia.org/SiteObjects/files/abamodelcode.pdf

a. Maryland State Board of Contract Appeals: http://www.msbca.state.md.us/

2. Note difference between detail and General Principles, with guidance frome.g., Federal Acquisition Regulations (FARs), http://www.arnet.gov/far/90-36/pdf/toc.html

3. There isn’t a huge resource of expert procurement literature. The GeorgeWashington University Law School in Washington, D.C., conducts aGovernment Contracts Program, and its resident instructors and authors, in particular Ralph C. Nash, Jr., and John Cibinic, Jr., have authored a coupleof the authoritatively cited texts, but the primary focus of their programs andworks are Federal Procurement Acquisition, not the MPC; nevertheless,many of the principles are the same.

E. Lore: As Carlos Madrid described the incident above, the procurement ofsupplies to meet the dire needs of the Marianas in 1876 had “obligatory legalformalities” to follow, but proceeded “according to custom”. Unfortunately, muchof what passes for regular procurement practice is the custom, habit and lorehanded down from lawyer to lawyer, contractor to contractor, procurement officerto procurement officer. Even those well placed and motivated to know better oftenact on instinct, common sense or analogy to make decisions about howprocurement should be conducted, regardless of what the law actually requires.

http://www.guamopa.org/

http://www.guamopa.org/docs/OPA0414.pdf

http://www.aia.org/SiteObjects/files/abamodelcode.pdf

http://www.msbca.state.md.us/

http://www.acqnet.gov/far/index.html

http://www.arnet.gov/far/90-36/pdf/toc.html


The best and worst of explanation often offered in defense of questionedprocurement practice is, “but that’s how we do it”. It is the best explanationbecause, at least someone is paying some attention and to some extent there issome consistency, if nothing else. It is the worst because, when everyone falls offthe same page, is blind to what the law requires, and starts making things up as theygo or have gone, procurement becomes arbitrary, inconsistent and obtuse, if notslipshod and detrimental to government and private contractors alike.

The Guam Procurement Act has, with some exception, pretty much been intact nowfor well over twenty years. Still, the law is only now really being discovered and,sadly, some very fundamental aspects are only now being acknowledged. Forinstance, for years GovGuam GSA has directly purchased directly from the FederalSupply Schedules in disregard of any local procurement laws or regulation, but withfull support of a series of legal opinions from the Attorneys General past andpresent. This has seen an expenditure of hugely significant sums of public fundswithout the usual accountability and competition required by law.

Another example: everyone knows the lowest responsive and responsible bidder ismeant to win a bid award, yet we have only recently had a Decision of the PublicAuditor, acknowledged as a case of first impression, that pointed out “responsive” isnot “responsible” and determinations of responsibility cannot be transformed intoissues of non-responsiveness merely by the “mandate” of an Invitation for Bids. Guam procurement lore had long taught us, and wrongly, just the opposite.

The author makes no claim to great authority of the subject. He acknowledgeswillingly that procurement law has been seen to be impenetrably obtuse,stultifyingly boring, and an aggravation to government and private business alike. He was also himself well versed in and convinced by procurement lore; until, thatis, he was forced to spend some time and have a look under the hood. He wassurprised, after more than a little work at it, to find an almost elegant internalstructure, cohesion and meaning in the Guam Procurement Law that previously wasunknown to him. It was a bit of a “‘Eureka’ moment”.

The purpose of this paper is to, hopefully, share with you that Eureka moment. It isonly an outline and will not cover every topic of Guam procurement law andregulation. It will not unlock all the secrets of the Guam Procurement Law but willhopefully provide a handy reference to some of them. Law is a dynamic thing, andwhat we know today will not necessarily be true tomorrow. No one should rely onthe statements in this paper as legal advice.

The hope is that this paper will help contribute to a unified knowledge, or debate,to regularize Guam procurement practice, and achieve the worthy procurementpolicy objectives, in the rational way the Guam Procurement Act contemplates.


II. PURPOSES AND POLICIES of Guam Procurement Law

A. The law and regulations specify certain purposes or policies of procurement law. These are not mere platitudes and ideals. They are intended to fill in the blanks andprovide direction when the law or regulations have holes or are in need ofclarification or direction. In procurement law, they have particular importancebecause the Public Auditor is charged with the broad duty to promote “thepurposes” of the Procurement Act, not simply its black letter strictures.

B. to simplify, clarify, and modernize the law governing procurement by thisTerritory (5 GCA § 5001(b)(1)).

1. “While it is the intent of the MPC [Model Procurement Act] to ‘simplify’state procurement procedures, the effect on Guam will be to somewhatcomplicate them. This is because procurement law under Executive Order65-12A on Guam is vague and leaves much to administrative direction. Atleast, this Act will regularize and centralize procurement on Guam and, inso doing, attempts to save money for the Territory and make procurementmore certain and regular for the vendors.” (Official Comment, 5 GCA §5001.)

C. to permit the continued development of procurement policies and practices (5GCA § 5001(b)(2)).

D. to provide for increased public confidence in the procedures followed in publicprocurement (5 GCA § 5001(b)(3)).

E. to ensure the fair and equitable treatment of all persons who deal with theprocurement system of this Territory (5 GCA § 5001(b)(4)).

1. This Chapter requires all parties involved in the negotiation, performance, oradministration of territorial contracts to act in good faith. (5 GCA § 5003.)

2. A Member will conduct its business fairly, honestly and with integrity. (Guam Chamber of Commerce Code of Ethics, Principle I.)

3. A Member should conduct its business within the spirit as well as the letterof the law. (Guam Chamber Ethics, Ethical Commentary IV-1.)

4. Making and keeping “determinations”. Throughout the procurement lawand regulations, procurement officers are meant to make “determinations”. The author takes the view that any determination, including a determinationof what is “the best interests of the Territory”, while deferring to agencyjudgment, should be kept in some record form, requires a deliberativebalancing of all the competitive policies of the procurement act, includingfair and equitable treatment of all parties, and not be impulsive, partial,deceptive, arbitrary, unreasonable or capricious.


a. “Written determinations required by this Chapter [the ProcurementAct] shall be retained in the appropriate official file of the ChiefProcurement Officer or the purchasing agency.” (5 GCA § 5020.)

(1) That code is adopted verbatim from MPC §1-301. There areModel Regulations intended to implement that code, whichdo not seem to have made their way into the GuamProcurement Regulations, notwithstanding the Comment tothe Guam Procurement Act, which says “[b]ecause this Actintends that the Policy Office adopt implementingregulations, Model Regulations are also available, and mustbe examined and changed to coincide with the version ofthis Act actually adopted by the Legislature.” (See, 5 GCA §5030.)

(2) Model Regulations implementing the Code require:

(a) Where the Procurement Code or these regulationsrequire a written determination; the officer requiredto prepare the determination may delegate itspreparation, but the responsibility for and theexecution of the determination shall not bedelegated. (§ R1-201.01.1.)

(b) Each written determination shall set out sufficientfacts, circumstances, and reasoning as willsubstantiate the specific determination which ismade. (R1-201.01.2.)

(c) While an officer is responsible for the execution ofthe written determination, other personnel,particularly technical personnel and appropriatepersonnel in the Using Agency, are responsible forfurnishing to the cognizant procurement official, inan accurate and adequate fashion, the informationpertinent to the determination. (R1-201.01.3.)

(d) Each written determination shall be filed in thesolicitation or contract file to which it applies, shallbe retained as part of such file for so long as the fileis required to be maintained, and except asotherwise provided by law or regulation, shall beopen to public inspection. (R1-201.01.5.)

b. Under the original Procurement Act, certain specific determinationswere said to be “final and conclusive unless clearly erroneous,


arbitrary, capricious or contrary to law.” (5 GCA § 5425.) Underrevisions allowing appeals to and oversight of the Public Auditor,“[n]otwithstanding § 5425 of this Chapter, no prior determinationshall be final or conclusive on the Public Auditor or upon anyappeal from the Public Auditor.” (5 GCA § 5703.)

F. to provide increased economy in territorial activities and to maximize to thefullest extent practicable the purchasing value of public funds of the Territory (5GCA § 5001(b)(5)).

1. All specifications shall seek to promote overall economy for the purposesintended.... (5 GCA § 5265.)

2. Objectives of the territory's supply management program include preventingwaste; continuing utilization of supplies; and obtaining a fair return of valueupon disposal of supplies. (2 GAR § 8102(a).)

G. to foster effective broad-based competition within the free enterprise system (5GCA § 5001(b)(6)).

1. All procurement of supplies and services shall, where possible, be madesufficiently in advance of need for delivery or performance to promotemaximum competition and good management of resources. (5 GCA §1102.03.)

2. All specifications shall seek to ... encourage competition in satisfying theTerritory’s needs, and shall not be unduly restrictive. (5 GCA § 5265.)

3. It is the policy of Guam that specifications permit maximum practicablecompetition consistent with obtaining supplies and services that are“adequate and suitable” for its needs.. (5 GCA § 4102(a)(1).

4. When for any reason collusion or other anti-competitive practices aresuspected among any bidders or offerors, a notice of the relevant facts shallbe transmitted to the Attorney General. (5 GCA § 5246.)

5. Unless other wise authorized by law, all territorial contracts shall beawarded by competitive sealed bidding.... (5 GCA § 5210(a).)

6. Emergency procurements shall be made with such competition as ispracticable under the circumstances.... (5 GCA § 5215.)

7. All unsolicited offers [any offer to the government other than one submittedin response to a solicitation] considered as being desirable shall besubjected to the Competitive Sealed Bidding process.... (5 GCA § 5219(e).)

8. “Fair and open competition is a basic tenet of public procurement. Such


competition reduces the opportunity for favoritism and inspires publicconfidence that contracts are awarded equitably and economically.” (MPCOfficial Commentary, # 3, §3-201, which is the same as 5 GCA § 5210(a).)

9. A Member should engage in fair, free and open competition with itscompetitors (Guam Chamber Ethics, Ethical Commentary III-2.)

H. to provide safeguards for the maintenance of a procurement system of quality andintegrity (5 GCA § 5001(b)(7)).

1. Each procurement officer shall maintain a complete record of eachprocurement. The record shall include the following (5 GCA § 5249) :

a. the date, time, subject matter and names of participants at anymeeting including government employees that is in any way relatedto a particular procurement;

b. a log of all communications between government employees andany member of the public, potential bidder, vendor or manufacturerwhich is in any way related to the procurement;

c. sound recordings of all pre-bid conferences; negotiations arisingfrom a request for proposals and discussions with vendorsconcerning small purchase procurement;

d. brochures and submittals of potential vendors, manufacturers orcontractors, and all drafts, signed and dated by the draftsman, andother papers or materials used in the development of specifications.

2. “[P]rotecting the integrity of the procurement process is one of the reasonsfor the requirement to create and maintain a procurement record.” (In theAppeal of Latte Treatment Center, Inc., OPA-PA-08-008, p 17.) “Noprocurement award shall be made unless the responsible procurementofficer certifies in writing under penalty of perjury that the aforementionedprocurement record was maintained and that it is complete and available forpublic inspection and this certification must be a part of the procurementrecord.” (Id.)

3. Public employment is a public trust.... Public employees must dischargetheir duties impartially so as to assure fair competitive access togovernmental procurement by responsible contractors. Moreover, theyshould conduct themselves in such a manner as to foster public confidencein the integrity of the territorial procurement organization. To achieve thepurpose of this Chapter, it is essential that those doing business with theTerritory also observe the ethical standards prescribed herein. (5 GCA §5625.)


4. Ethical Standards

a. For Government Employees: Any attempt to realize personal gainthrough public employment by conduct inconsistent with the properdischarge of the employee’s duties is a breach of a public trust. Inorder to fulfill this general prescribed standard, employees must alsomeet the specific standards set forth in §§ 5628 through 5633 of thisChapter.

(1) In the Latte Treatment Center appeal, supra, there wasmention that the agency representative had, at one time orother, been given air fare and/or accommodation to visiteach of the offerors. There was a specific allegation of sucha breach of ethics standards at issue in the appeal. TheDecision accepted that the payments may have been animproper gratuity, if proven, but found no specific, credibleevidence had been presented to prove the allegation. ThePublic Auditor required, in any event, proof of “a connectionbetween” any payment by the contractor/offeror and therelevant solicitation. The Public Auditor did find, though,that the employee should have been recused from anyconsideration of or involvement with the solicitation, andthat the employee’s “appearance of impropriety is a seriousimpairment to the public confidence and integrity of thesolicitation process....” (Id., at p 15.)

b. For Non-Government Employees: Any effort to influence any publicemployee to breach the standards of ethical conduct set forth in thisSection and §§ 5628 through 5633 of this Chapter is also a breachof ethical standards. [These sections deal with Conflicts of Interest,Disclosure Requirements, Gratuities and Kickbacks, ProhibitionsAgainst Contingent Fees, Restrictions on ContemporaneousEmployment of Present and Former Employees, and Use ofConfidential Information.] (5 GCA § 5626.)

(1) A Member should avoid taking unfair advantage of itscustomers, suppliers, competitors and employees. (GuamChamber Ethics, Ethical Commentary I-2.)

(2) A Member will accept its rights and obligations forconducting business within a framework of a democraticsystem of laws. (Guam Chamber Ethics, Principle IV.)

I. to require public access to all aspects of procurement consistent with the sealedbid procedure and the integrity of the procurement process.

1. The [procurement] record required by § 5249 of this Chapter [see above] is


a public record and, subject to rules promulgated by the Public Auditor,any person may inspect and copy any portion of the record. (5 GCA §5251.)

a. To date, the Public Auditor has not promulgated any such rules.

2. Consider more broadly, the Freedom of Information Act, known also as theSunshine Act 5 GCA, Div. 1, Chpt 10, § 10101 et seq.

a. The author is of the view that the FOI content and process rules isnot adequately responsive to the needs of the procurement process. Rules from the Public Auditor to facilitate and enforce access to theprocurement record would be in keeping with the spirit “to providefor the expeditious resolution of controversies”, as mentioned in 2GAR § 12101.

J. Policy in favor of planned procurement

1. “All procurement of supplies and services shall, where possible, be madesufficiently in advance of need for delivery or performance to promotemaximum competition and good management of resources.” (5 GCA §5010.)

2. The Procurement Record shall include “the requesting agency’sdetermination of need.” (5 GCA § 5249(e).)

3. Consider general principles laid out in FAR Part 7 (“Acquisition Planning”)and Part 11 (“Describing Agency Needs”).

a. “The purpose of this planning is to ensure that the Governmentmeets its needs in the most effective, economical, and timelymanner.” (FAR Subpart 7.102.)

b. Acquisition planners address the requirement to specify needs,develop specifications, and to solicit offers in such a manner topromote and provide for full and open competition with due regardto the nature of the supplies and services to be acquired. (FARSubpart 7.103(c).)

(a) “Acquisition plans start with a statement of need. (Subpart 7.105(a)(1).) If the acquisition planning isbeing done prior to preparing a budget, the agencywill have to analyze its needs in a thorough manneras part of the acquisition plan.” (CompetitiveNegotiation, Second Edition, Ralph C. Nash, Jr., John Cibinic, Jr., and Karen R. O’Brien, The GeorgeWashington University, Law School Government


Contracts Program, p. 41, cited hereafter as “Nash,Cibinic and O’Brien.)

c. Acquisition planning should begin as soon as the agency need isidentified, preferably well in advance of the fiscal year in whichcontract award is necessary. (FAR Subpart 7.104(a).)

d. Requirements and logistics personnel should avoid issuingrequirements on an urgent basis or with unrealistic delivery orperformance schedules, since it generally restricts competition andincreases prices. (FAR Subpart 7.104(b).)

e. “Competition is the most fundamental goal of acquisition planningbecause it is believed that obtaining competition is the best methodof ensuring that the Government will receive the supplies andservices it needs at fair and reasonable prices. Competition alsofurthers the [legislative] goal of providing all qualified sources anopportunity to participate in the procurement process.” (Nash,Cibinic and O’Brien, p 85.)

4. “Lack of advance planning does not justify noncompetitive procurement.” (Nash, Cibinic and O’Neal, p. 38.)

a. 41 USC §253 and 10 USC § 2304 (f) : “In no case may the head ofan agency ... (5) enter into a contract for property or services usingprocedures other than competitive procedures on the basis of lack ofadvance planning.”

K. Policy in favor of local procurement (5 GCA § 5008).

1. “All procurement of supplies and services shall be made from amongbusinesses licensed to do business on Guam....”

2. “Procurement of supplies and services from off Guam may be made if nobusiness for such supplies or services may be found on Guam or if the totalcost F.O.B. job site, unloaded, of the same supplies or services “ obtainablefrom a business on Guam is not more than 115% of the off-island cost. Thus, as between an on-island bidder and an off-island bidder, the off-islandbidder loses unless its bid is no more than 85% of the on-island bidder. Putting numbers to it, an on-island bidder with a $100 bid price wins overan off-island bidder with a bid price of $85.01.

3. “Award to an off-island vendor without a comparison to the price oravailability of local vendors is inconsistent with [the local preferenceprovision] 5 GCA § 5008. Without the required cost analysis, the recorddoes not support an award to [an off-island bidder].” (In the Appeal ofEmission Technologies, Inc., OPA-PA-07-002, p 12; note, however, this


Decision was vacated by Writ of Mandate issued by the Guam SuperiorCourt, on other issues: TRC Environmental Corporation vs. Office of thePublic Auditor, SP 160-07.)

4. Businesses “licensed to do business on Guam”:

a. Must maintain “an office or other facility” on Guam

b. Plus one of the following:

(1) Manufacturing which adds at least 25% value using USCitizens, permanent residents or authorized workers who arecitizens of the old Trust Territory.

(2) Regularly carries inventory for regular immediate sale of atleast 50% of supplies to be procured.

(3) Retail or wholesale location that regularly carries aninventory on Guam of items of similar nature to those soughtof a value of at least half the bid value or $150,000(whichever less).

(4) Service business “actually in business”, doing “substantialportion” on Guam, hiring at least 95% US Citizens,permanent residents or authorized workers who are citizensof the old Trust Territory.

5. By Executive Order 2000-25, Governor Guiterrez purported to override theeffect and intent of the Local Preference provisions of the GuamProcurement Law, to give additional preference to local consultants orproviders of educational training and instruction to GovGuam departmentsand agencies. This preference was not based on a cost comparison butprovides a blanket preference simply on the basis of being “on-island”. Theauthor does not believe the Executive has the power to make or remake law,and that this Order conflicts directly with Guam law, beginning with 5 GCA§ 5004(b), discussed below. Nor does the Governor have any procurementrule making authority, which has been reposited in the Policy Office: seeArticle III below.

6. The Federal government (Buy American Act; see FAR Part 25.000, http://www.acquisition.gov/far/current/html/Subpart%2025_1.html), as wellas State and municipal governments across the US and abroad have variousforms of local preference provisions. (Just search online and see, e.g.,http://www.oregon.gov/DAS/SSD/SPO/reciprocal_detail.shtml.)

7. In In the Appeal of Teal Pacific, LLC, OPA-PA-09-002, (dismissed when thePublic Auditor recused herself), the Appellant argued that the Guam local

http://www.acquisition.gov/far/current/html/Subpart%2025_1.html

http://www.oregon.gov/DAS/SSD/SPO/reciprocal_detail.shtml


preference provision is an unconstitutional and inorganic violation of itsright to equal protection. The author has sympathy for the agency's positionthat it is its duty to apply the law, not determine it, and suspects the PublicAuditor would reach the same result; that issue is for a court to determine.

a. Note that a Federal Appeals Court has ruled unconstitutional aFederal set-aside provision favoring women-owned businesses basedon the ruling that no relevant findings were made to substantiate thepresumptions underlying the alleged purpose of the act. (See, RotheDevelopment Corp. v. Department of Defense, United States Courtof Appeals for the Federal Circuit, 2008-1017,http://www.cafc.uscourts.gov/opinions/08-1017.pdf .) The ultimateramifications and ripple effect of this decision are yet to be known.

b. The author believes that the Rothe Development rationale would beinapplicable to an analysis of local preference rules. There, the issuewas alleged discrimination based on status (women only, minorities,etc.) Status issues attract strict judicial scrutiny under an equalprotection analysis. Local preference provisions involve commercialissues of geography only and, as such, do not enjoy such preciousprotection of the courts. Indeed, the current legal consensus seemsto be that the Commerce Clause and its protection of interstatecommerce does not apply to Guam.

L. Policy in favor of Bio-friendly products

1. Public Law 21-22 purports to change the Procurement Regulations “toinsure that in all purchases of goods by the government of Guam, whenpossible, emphasis shall be placed on the purchase of products that arebiodegradable, reuseable, recyclable, or recycled, or any combination.” The law did not direct the Policy Office to change its regulations, but itsregulation 2 GAR § 1102.02 purports to be in compliance with the law.

2. § 1102.02 gives a ten percent (10%) advantage to any bidder of productsmeeting those bio-friendly characteristics. Moreover, it specifically providesthat the 10% bid advantage is to be given in addition to the 15% localpreference, with the express effect that there could be a 25% bid advantagewhen bid-friendly products are bid by local companies meeting the localpreference requirements.

M. The Procurement Act applies to almost all GovGuam purchases.

1. “This Chapter shall apply to every expenditure of public funds irrespectiveof their source, including federal assistance funds ... by this Territory, actingthrough a governmental body .., under any contract...” (5 GCA § 5004(b).)

2. Exceptions are made (id.) for

http://www.cafc.uscourts.gov/opinions/08-1017.pdf


a. Pre-emptive federal government funding regulations, if any.

b. Grants or inter-governmental contracts.

c. Gifts, bequests and other such private grants and donations, orcooperative agreements.

N. A word from your author:

1. Notice that there is no policy that says procurement is to be conducted forthe convenience or ease of the government or the public. Governmentprocurement is very clearly intended to be methodically planned, competitive, transparent and accountable. This is, not coincidentally, thegoal of private sector procurement, as well; in a word, it’s called“management”. The author takes umbrage at anyone who blamesineffective government management on the government procurementprocesses. Those within and without the government who complain andeditorialize about the “cumbersome” procurement process fail to understandits principle values, or are just pursuing some other agenda. If the price offreedom is vigilance, the price of a consistently fair, effective andtrustworthy procurement process is “red tape”. Because, when properlyunderstood and used, procurement red tape does not suffocate us, it holdsthe system and its competing participants together.

2. The author does not doubt that many efficiencies could be had in theprocurement “system”, but would prefer that we all first try to make it workeffectively by making it work the way it is designed to work, beforetinkering too much with the “system”. The author believes the most obviousfailures and burdens of the Guam “procurement system” of recent times aredue to dysfunctions in operating the system, not the system itself. The firststep to making it function properly is to understand and experience how it ismeant to work under the existing law, and then make that process functionprofessionally, consistently and routinely.

3. The Guam legislature chose to forego procurement training and educationwhen it adopted the Guam version of the Model Procurement Code. In thisregard it is important to note a significant “hole” in the procurement law andregulation:

a. Along with the MPC, the Guam Procurement Act has a Part entitled“Coordination, Training and Education” (Part E, Article 2 of theGuam Procurement Act.)

b. Guam law and regulation have enacted the “Coordination”provision, calling for collection and preparation of procurementstatistics (5 GCA § 5140; 2 GAR § 2111; MPC § 2-501). But that is


all. Guam law does NOT address “training and education”.

c. The MPC (§ 2-502) contemplates a “Procurement Advisory Council”to be funded by the Government to discuss and makerecommendations “for improvement of the procurement process”,and to make studies, analysis and reports as requested. Guam lawdoes not follow that lead.

d. The MPC (§ 2-503) goes further and contemplates formation of whatit terms a “Procurement Institute” to conduct or participate inprocurement education and training for public and privateemployees and others, as well as conduct research and maintain alibrary of resources, to be funded by the Government.

e. Official Commentary to MPC § 2-503 make the following points:

(1) “Procurement is a complex process which experience hasshown can only be adequately learned over a period oftime. Thus training in procurement is vital for new[GovGuam] employees without prior experience in the field. It will accelerate the learning process and will tend to make[GovGuam] procurement personnel knowledgeable andeffective in the minimum time.”

(2) “In addition, training courses should also be reasonablyavailable to vendor personnel, university professors,students, and others. Experience has shown that when avendor or other person affected by the system makes anunnecessary mistake through lack of knowledge of theground rules of procurement, it causes friction and expenseto the [government].”

f. In reaction to certain announcements by the Obama administrationto reform Federal government procurement processes, ProfessorsSteve Kelman and Steve Schooner made the following comments(see, Commentary: Achieving effective reform, Federaltimes.com,http://federaltimes.com/index.php?S=4032866.). Steve Kelman isthe Weatherhead Professor of Public Management at HarvardUniversity’s John F. Kennedy School of Government. SteveSchooner is the co-director of the Government Procurement LawProgram at George Washington University Law School.

(1) “The federal procurement system is the world’s most heavilyregulated, and a well-established regime of laws, statutes andpolicies addresses each of the president’s concerns. But rulescan’t spend money wisely, only people can. And we’ve gothuge people problems.... “

http://federaltimes.com/index.php?S=4032866


(2) “Generating competition is time consuming and laborintensive. The government needs experienced professionalsto, among other things, understand agencies’ requirements tofulfill their diverse missions, plan contracting solutions tofulfill those requirements, conduct market research toidentify the best contractors, solicit those contractors toassure competition and that the government get a good deal,draft and negotiate contracts, manage relationships duringcontract performance, and perform quality assurance toensure the government obtains the value it paid for and highlevels of customer satisfaction. Proper staffing will contributemore toward responsible fiscal stewardship than anotherround of studies, legislation or policymaking.”

III. PROCUREMENT ADMINISTRATIVE STRUCTURE: Policy Office, GSA, DPW, PublicAuditor, and Attorney General

A. Centralized Procurement Policy: 5 GCA § 5120 states the general objective tocentralize all procurement activities in the Policy Office, the Chief ProcurementOfficer at the General Services Administration (CPO/GSA) and the Department ofPublic Works (DPW).

1. All Executive Branch bodies are subject to the general requirements ofGuam procurement law and regulation, although certain bodies areauthorized to directly conduct their own procurement. These bodiesinclude GCC, UoG, GPSS, GMHA, GEDCA and GVB. “It is the intent [ofthe Legislature] to require all Executive Branch governmental bodies,including autonomous agencies, ... to be governed to the maximum extentpracticable by [the Procurement Act].” (5 GCA §5125.)

a. Note the author’s comments above in respect of Executive Order2000-25 and the Governor’s lack of power to make law orregulation in respect of procurement matters.

2. This has led to such Agencies often adopting their own procurementregulations, with their own numbering/classification systems, even thoughthe general Guam procurement regulations preempt anything substantivelyinconsistent (5 GCA § 5131; Guam Imaging Consultants, Inc., v. GuamMemorial Hospital Authority, Guam Supreme Court, 2004 Guam 15 at ¶¶22, 41).

3. The author believes this is not a satisfactory development and efforts shouldbe made to identify the “core” procurement regulations that are intended toapply uniformly throughout GovGuam, allowing Agencies to then only


adopt such additional regulations as are necessary to conduct their directprocurements. This will have the added benefit of focusing agencyprocurement practice on the standardized general procurement regulationsand away from any notion they may be a law unto themselves.

B. Policy Office: The Policy Office is meant to be established under the Office of theGovernor. It is meant to consist of five members, three government employeesselected by the Governor plus the Directors of Administration and DPW; the DPWDirector is the chair. (5 GCA § 5101.)

1. The Policy Office is responsible (5 GCA § 5102) for promulgation ofRegulations governing “procurement, management, control and disposal ofall supplies, services and construction to be procured by the Territory.”

a. “The Policy Office shall not delegate its power to promulgateregulations.” (5 GCA § 5130(b).)

b. The Attorney General has issued an opinion that GSA has the powerto adopt alternative methods of source selection and procurementprocedures to implement the alternate method. (LegalMemorandum (GSA 07-1084, June 16, 2008.) It based this poweron the authority given GSA to adopt internal operational procedures,5 GCA § 5113(b) and 2 GAR § 2104(b). The Public Auditor hasdecided that this legal opinion is “incorrect”, and GSA does not havesuch broad authority. (In the Appeal of Town House Dept. Stores,Inc. dba Island Business Systems and Supplies [IBSS vs GSA], OPA-PA-08-012 (decided February 10, 2009).)

2. The Policy Office is an on-again-off-again institution. Presently, it is theauthor’s understanding that it lacks the appointees necessary to function.

C. GSA: The CPO of GSA shall serve as the central procurement officer “with respectto supplies and services.” (5 GCA § 5113(a).) The CPO’s duties include:

1. Procure or supervise procurement of all supplies and services.

a. CPO has a limited power (2 GAR § 2105) to delegate her authorityto any government body or official (5 GCA § 5114) and to revokeany authority previously delegated (2 GAR § 2105). Legislationoccasionally limits that authority (e.g., 5 GCA § 5116 re GPA) orpreempts it (e.g., 5 GCA § 5117 re Guam Preservation Trust).

b. Items of works of art, publications, A&E services and investment oractuary services are generally exempt from the requirement of directCPO or DPW procurement, but the procuring agencies must do sopursuant to general procurement law and regulation. (5 GCA §5124.)


2. Exercise general supervision and control over all inventories of supplies.

a. CPO “shall have general supervision of all inventories of tangiblepersonal property, whether warehoused or in use, belonging to theterritory or any of its agencies. This responsibility shall not,however, relieve any agency of accountability for tangible personalproperty and other supplies....” (2 GAR § 8102(c).)

b. Sound inspection, testing, warehousing, and inventory practices arecalled for, and effective means of transferring and disposing ofproperty must be employed. (2 GAR § 8102(a).)

c. Ascertain or verify that supplies, services, or construction itemsprocured by such officer conform to specifications. (2 GAR §8102(b).)

d. General supervision of any receiving, storage, and distributionfacilities and services maintained and operated by the Office of theChief Procurement Officer or using agencies. (2 GAR § 8102(d).)

e. Using agencies shall notify the CPO of all excess supplies. Nousing agency shall transfer, sell, trade-in, or otherwise dispose ofsupplies owned by the territory without written authorization of theChief Procurement Officer. (2 GAR § 8102(e) and second (d); Note:The copying of the Model Code and Regulations into Guam Codeand Regulations is replete with typographical and reference errors.)

f. Disposal: Surplus supplies shall be offered through competitivesealed bids, public auction, established markets, or posted prices. Itis recognized, however, that some types and classes of items can besold or disposed of more readily and advantageously by othermeans, including barter. In such cases, and also where the nature ofthe supply or unusual circumstances call for its sale to be restrictedor controlled, the Chief Procurement Officer may employ such othermeans, including appraisal, provided such officer makes a writtendetermination that such procedure is advantageous to the territory. (2 GAR § 8102(h).)

g. Prepare, issue, revise, maintain and monitor the use of specificationsin accordance with the law and regulations, and this can bedelegated to the using agencies, but not vendors. The CPO cancontract with third parties to prepare specifications provided there“will be no substantial conflict of interest involved”. (2 GAR §4103.)

(1) “GSA should review the specifications provided by the


purchasing agencies to ensure they will result in aprocurement that maximizes the purchasing value of publicfunds and amend such specifications to ensure that purposeis achieved.” ( In the Appeal of Guam Publications, Inc.,OPA-PA-08-007, p 12.)

h. Data Collection: The CPO is responsible, together with BBMR andthe Public Auditor, to prepare statistical data concerningprocurement, usage and disposition of all supplies and services. (2GCA § 5140.)

D. DPW: The Director of DPW shall serve as the central procurement officer withrespect to construction.

1. Duties of the Director of DPW include (5 GCA § 5113(c)(2)):

a. Procure or supervise the procurement of all construction needed byGuam.

b. Establish and maintain programs for inspection, testing andacceptance of construction.

c. Responsibility for selection of methods of construction contractingmanagement, that is, the contracting method and configuration thatwill most likely result in timely, economical, and otherwisesuccessful completion of the construction project. (2 GAR §5102(a).) Note that this does not empower DPW to alter or establish methods of source selection (that is, bidding methods); itonly allows contract management flexibility. This is emphasized by2 GAR § 5108, which says that the methods of contractingmanagement apply to A&E and land surveyor contracts, but For thepurpose of acquiring the services, the methods of source selectionshall be followed.

E. Public Auditor

1. The Office of the Public Auditor has had a name makeover and, as a resultof PL 30-27, signed into law June 16, 2009, is now to be known as theOffice of Public Accountability, but can still be called “OPA”.

a. There is curious politics behind the name change. The preamble tothe law states, “that the current title of the Office of the PublicAuditor appears to imply an office of an individual rather than thefunction of the office. Oftentimes, the findings of an audit may beattributed to the elected individual, as opposed to an actual findingof the audit or investigation, especially if the audit findings reflectquestionable accountability issues.” Thus, the name change.


b. The Public Auditor is still the Public Auditor; only the name of theoffice has changed. (1 GCA §§ 1903, 1906, etc.)

2. The Public Auditor has the power and jurisdiction to hear any appeal of aprocurement protest, as well as appeals from contract disputes anddebarment or suspension actions. She also has the power to make certaindeterminations and adopt certain regulations within the context of theprocurement laws.

3. It must be remembered the Public Auditor also has the power and duty toconduct financial and management audits, program evaluation and review,and to inquire into any person having any official relations with any officerin any matter relating to the expenditures of government funds and property,and to report offenses for prosecution to the AG, and to conduct otherinvestigations and render other reports as required. (1 GCA Chpt 19, §1900 et seq.)

4. The role of the Public Auditor in Procurement Appeals will be discussedbelow.

F. Attorney General

1. The Attorney General has a limited role to play generally, although aprimary role as attorney for any Agency it represents. Of course, theAttorney General should strive to uphold the law and not undermine it. TheAG serves as legal counsel and provides legal services to the Policy Officeand the GSA (and even the Public Auditor in some circumstances – 1 GCA§ 1909(d)). When the AG is meant to approve a contract, she must approveboth form and substance for legality, and that may mean inquiring into theprocedures that precede the making of the contract, that is, the procurementprocess that led to the award of contract. (5 GCA § 5150.)

IV. METHODS OF SOURCE SELECTION (Procurement Methods)

A. Generally speaking, there are only six main means of allowed procurementmethods, which the Procurement Act speaks of as “methods of source selection” (5GCA § 5210(a)):

1. Competitive Sealed Bidding (2 GAR § 3109(b); 3109(n)(1))

2. Multi-step Sealed Bidding (2 GAR § 3109(r))

3. Small Purchases (2 GAR § 3111)

4. Sole Source (2 GAR § 3112)


5. Emergency (2 GAR § 3113)

6. “Professional” Services (5 GCA §§ 5216 and 5121; 2 GAR § 5108)

B. Of these, only the competitive sealed bid method can be used for all solicitations, inall circumstances, though it is not always ideal, which is why there are otherapproved methods. All other methods are restricted to particular conditions of use;any use of a method that does not comply with its particular conditions of useviolates the procurement system and is grounds for protest.

C. “The exceptions to the sealed bid process are delineated by statute.... Theexceptions ... are limited, and Guam law no longer provides for an alternative tosealed bidding except as provided above.” (Fleet Services, Inc. v. Dept. ofAdministration, 2006 Guam 6, ¶¶ 14,15.)

D. Other special circumstances:

1. Unsolicited Offers (5 GCA § 5219)

2. Purchases from “a nonprofit corporation employing sheltered orhandicapped workers”. (5 GCA § 5217)

3. Drugs to be purchased by DOA, DPHSS, GMHA and GPSS shall bepurchased, whenever possible, directly from the manufacturer so as toensure and maximize economy. (5 GCA § 5270)

4. “Unless other wise [sic] authorized by law” (5 GCA § 5210(a)).

a. Direct purchases from the United States (5 GCA § 5122) are not“otherwise authorized” – see section below on Federal SupplySchedule purchases.

E. Contract renewals.

1. Guam procurement history has included many instances where, once acontract has been let, it is thereafter renewed indefinitely. The fact that theGuam Election Commission has leased the same office space for over thirtyyears without ever putting it out to bid is just one example. This isabsolutely improper practice. The Procurement Act applies to everyexpenditure of public funds (5 GCA § 5004(b)) and all territorial contractsshall be awarded by one of the approved methods of source selection (5GCA § 5210(a)).

a. Although there is a fine but clear legal distinction between renewingand extending a contract, the same rule would apply in either case.A renewal is technically a new contract and clearly within the


language of § 5210(a), and creating an extension of an existingcontract after award, when that was not within the contemplation ofthe specifications of the original bid, violates the notion that awardscan only be made consistent with the solicitation criteria (see, e.g., 5GCA §§ 5211(g) and 5201(d) and (f), 2 GAR § 3114(f)(2)).

2. A properly procured contract may contain a renewal option, but such acontract provision is subject to strict conditions, as discussed in the articlebelow dealing with contract types.

3. In L.P. Ganacias Enterprises, Inc., dba Radiocom vs. GIAA and Guam CellCommunications, CV 1787-00, (at page 17) the Judge said, “[i]t is theopinion of this Court that to allow Defendant [GIAA] to automatically renewits contract with Guam Cell at the end of the one year period would clearlyside step the purpose and the protections of the open bidding process forgovernment contracts. Thus, to allow the Defendant to renew its contractwith Guam Cell at the end of the contract term, for a price that is to benegotiated between them, circumvents the entire bidding process, and thisis not proper.... Rather, GIAA will again have to open the bid ... and willonce again have to go through the entire bidding process before awardingthe contract ....”

V. “BID BONDING”

A. Actually, “bond” is the common word used, but “security” is more technically aptand specified in the law (see, 5 GCA § 5212). Security includes a bond, but alsocan include other forms of security such as cash or other form satisfactory toGovGuam: a cashier’s check or standby letter of credit might be alternatives (see, 2GAR § 3109(c)(4)(D).

B. Bid security for competitive sealed bids for supplies or services:

1. Bid security for competitive sealed bids for supplies or services is requiredwhen the total price estimated to be bid exceeds $25,000, and may berequired when under that amount, by a written determination (“andjustification”) included in the IFB. (5 GCA § 5212(a).)

2. The amount of bid security is fifteen percent (15%) of the amount bid. (5GCA § 5212(b).)

a. Note: The amount of bid security specified (15%) was made byamendment to the law in PL 27-127:2. This legislative change hasnot yet been reflected in regulation, which continues to purport toallow the agency head to determine the amount (2 GAR §3109(c)(3)(A). The legislative change overrides the inconsistentregulation. (See, Guam Imaging Consultants, supra.)


3. Release of bid security. The law here is probably broader than intended. Aswritten, the “bid security required under any applicable [IFB] shall not bereleased upon award of the bid, but instead shall continue in full force andeffect until delivery of the supplies or services....” (5 GCA § 5212(c).) Thisdoes not by its terms limit the application of the continued effectiveness tothe successful bid and literally applies to the security of all bids, includingrejected or high bids. The apparent intent, however, is to have only thesuccessful bid security convert to and replace the need for a separateperformance security; all others should be released upon withdrawal orrejection of the bid. (See, 5 GCA § 5212(f).)

4. Failure to provide required bid security may cause the bid to be rejected asnon-responsive; see section on materiality and responsiveness below.

C. Bid security for competitive sealed bids for construction contracts:

1. 5 GCA § 5303(a) demands essentially the same bid security requirementsfor competitive sealed bids for construction contracts as is noted for suppliesand services, above (i.e., required for bids expected to exceed $25,000 anddiscretionary for bids below that amount), except that there is norequirement for making a determination and justification for under $25,000bid security to be made part of the IFB.

2. Other provisions for bid security for construction contracts also parallelthose for supplies or services, including the amount of the security and thepossibility of rejection for noncompliance, the main significant differencebeing there is no provision intended to extend the bid security into theperformance period, as there is with the supplies or services provision.

3. As with supplies and services, failure to provide required bid security maycause the bid to be rejected as non-responsive, but the situations in whichsuch failure may be considered to be “non-substantial” are more limited: see2 GAR § 5103(d).

D. There does not appear to be any requirement for security for any bid or offer underany of the other methods of source selection for construction projects (besidescompetitive sealed bid), nor any prohibition against any such security, if required inany such solicitation.

VI. COMPETITIVE SEALED BIDDING (5 GCA § 5211; 2 GAR § 3109)

A. The default method. Preferred to all others. “Contracts shall be awarded bycompetitive sealed bidding except as otherwise provided in § 5210(a)....” (5 GCA §5211.)


B. The form is always by Invitation for Bids (IFB), which should contain the following(2 GAR § 3109(c)(2)):

1. Instructions and information to bidders concerning the formalities of when,where, how to bid; the “form of offer” requisites. It’s meant to answer the“what do we want from you and when do we want it” question.

2. A purchase description of what it is the Government wants; that is, what itwants, when it wants it, how it will evaluate the product offers, and anyinspection or acceptance requirements.

a. “Purchase description means the words used in a solicitation todescribe the supplies, services or construction to be purchased....” (5 GCA § 5201(b)(d).) “Unless the context requires otherwise, theterms specification and purchase description are usedinterchangeably throughout these Regulations.” (2 GAR §4101(a)(4).)

3. The terms and conditions of the contract to be awarded, including suchincidental matters as warranties and bonding. This is intended to fill in theultimate essential legal requirements of the contract, otherwise the bid isnothing more than an unacceptable “agreement to agree”.

4. Other formalities of the bid must also be met, such as signatures,declarations of ownership/major stockholders, certifications of non-collusion, bid bonding and the like as specifically provided by law orregulation.

5. Remember that by signing a bid, you are making a legally enforceable offerto contract, so all essential legal requirements of offer and acceptance aremet when the government “awards” the contract by accepting the bid.

C. Distribution, notice and “bidding time”:

1. The law requires simply “adequate public notice” of IFBs. Newspaperpublication is only required if the procurement exceeds $25,000, and thenonly requires seven (7) days notice before final submissions. (2 GAR §3109(f)(2).) In all cases, the solicitation is meant to be initiated, not bypublication, but by “distribution” by mail or other means “furnished to asufficient number of bidders for the purpose of securing competition.” (2GAR § 3109(f)(1).) Thus, GovGuam is meant to affirmatively seek outcompetition, not passively see what pops up, especially when it isrecognized that newspaper ads often appear buried in the paper and unreadby potential vendors.

2. In contrast to the minimum publication time, and lore about when to startmeasuring the bidding time, the minimum bidding time is fifteen (15) days


from “the date of distribution” to the “time and date set for receipt ofbids”. (2 GAR § 3109(d).)

a. Although there is a minimum 15 day bidding time, “[i]n each casebidding time will be set to provide bidders a reasonable time toprepare their bids”. (Id.)

b. Further, “a shorter time [may be provided if] deemed necessary for aparticular procurement as determined in writing by the procurementofficer.” (Id.)

D. Withdrawal, cancellation and rejection of all bids

1. A bidder can modify or “withdraw” a bid by written notice prior to the timeset for bid opening. (2 GAR 3109(j) and (k).)

2. Solicitations should only be issued when there is a valid procurement needunless the solicitation states that it is for informational purposes only. (2GAR § 3115(b).)

3. The Government can “cancel” a solicitation only prior to opening if there isno longer a need, nor funds, or “proposed amendments to the solicitationwould be of such magnitude that a new solicitation is desirable.” ( GAR3115(d)(1)(B).)

a. Preparing and distributing a solicitation requires the expenditure ofgovernment time and funds. Businesses likewise incur expense inexamining and responding to solicitations. Therefore, althoughissuance of a solicitation does not compel award of a contract, asolicitation is to be cancelled only when there are cogent andcompelling reasons to believe that the cancellation of the solicitationis in the territory's best interest. (2 GAR § 3115(b).)

b. Cogent and compelling reasons for cancellation need not be givento disappointed bidders, but such reasons must exist; only a briefexplanation of the reason for cancellation need be given. (J&BModern Tech v. GIAA, Guam Superior Court, CV 0732-06, p 6.) Inthat case, the plaintiff tried, unsuccessfully, to enjoin an agency fromcancelling a bid based on the sparseness of the information given inthe notice of cancellation, and the remedy and factual posture of thecase was an uphill battle from the start.

4. After bid opening and prior to award, the solicitation cannot be ‘cancelled’but all bids may be "rejected" in whole or part (2 GAR 3115(d)(2)(A) IF inthe Territory’s “best interests”, including:

(1) there is no longer a need


(2) “prices exceed available funds and it would not beappropriate to adjust quantities to come within availablefunds” [note this condition is not applicable to cancellationsprior to opening due to lack of funding]

(3) the specifications were ambiguous or inadequate

(4) the solicitation did not provide for consideration of all factorsof significance to the territory

(5) appearance of collusive bids

(6) all otherwise acceptable bids or proposals received are atclearly unreasonable prices

b. Where GovGuam “cancels” a bid after bid open, (as opposed to“rejecting” all bids) it does so improperly and the cancellation isvoid. (In the Appeal of Pacific Security Alarm, Inc., OPA-PA-07-009.)

c. Compare rejection of all bids to a rejection of an unsuccessful bid oroffer. In the latter case the rejected party may request that reasonsbe given for such a rejection. More on that below. Here note thatthe right to request reasons granted to an “unsuccessful” bidder orofferor probably does not apply to a rejection of all bids; the Court’semphasis on “the best interests of the Territory” in the J&B ModernTech case (supra), which is also a test for rejection of all bids, lendssupport to this argument.

5. Too Late, too bad: Any bid submission, modification or withdrawalreceived after the time “set for opening“ of bids is late and will not beconsidered unless it was late due to the direct action or inaction ofGovGuam personnel.” (2 GAR § 3109(k).) The word “set” would excludeany bid that comes in at the start of a delayed bid opening, but who wouldthat prejudice? (See discussion of bidder prejudice and responsiveness,below.)

E. Bid “mistakes” (discovered after opening, before award) generally are closelyscrutinized. If the error was one of judgment rather than, for instance, a clericalmistake, the bidder is stuck with his original judgment. Minor bid “mistakes” whichare not contrary to the interest of the Government or prejudicial to other biddersmay be corrected. (2 GAR § 3109(m).)

1. If the Procurement Officer opening the bids knows or should know there isa patent mistake, and the mistake is minor and non-prejudicial, the officershould ask the bidder to confirm or correct the mistake.


2. If the mistake is a minor informality of form or otherwise insignificant andnon-prejudicial, the Procurement Officer “shall waive such informalities orallow the bidder to correct them.” Examples include failure to returnrequired number of signed bids or failure to sign where required but otherplaces were signed signifying intent to be bound.

3. Mistakes that can be waived or corrected “without prejudice to otherbidders” are those when “the effect on price, quantity, quality, delivery, orcontractual conditions is negligible.” (2 GAR § 3109(m)(4)(B))

F. The award of the contract is “to the lowest responsible bidder whose bid meets therequirements and criteria set forth in the” IFB. (5 GCA § 5211(g).)

1. The short hand, but not as precise, version of this general rule is that “theaward goes to the lowest responsible and responsive bidder”. (2 GAR §3109(n)(1).) There are thus three criteria to separately and independentlyassess:

a. A Responsive bid (“which meets the requirements and criteria of theIFB”).

b. A Responsible bidder (capable, trustworthy; not a guaranty ofperformance, only expectation of performance).

c. “Lowest” price/cost.

2. To discourage collusion among bidders, tie low bids are generally not to beawarded by drawing lots or dividing the business, but only in such“permissible manner that will discourage tie bids.” In the case there is nosuch method, the award can be made by drawing lots, but not dividing thebusiness. (2 GAR § 3109(o)(2).)

3. The determination of the lowest responsive bidder must focus on priceconsiderations, not the qualification of the bidders. It is improper toevaluate a bid based on the ranking and selection of the most qualifiedcompany. (In the Appeal of JMI Medical Systems, Inc., OPA-PO-07-011, pp10-11.)

4. Bids and offers must be evaluated fairly and effectively to make sure theycomply with the criteria of the solicitation. In L.G. Ganacias, CV 1787-00,supra, the Judge stated (at page 23) that the person charged with evaluatingthe bid offerings “should be an individual with some knowledge of theproduct which is the subject of the bid”. There, the evaluator whoreviewed the bids testified she did not examine samples submitted becauseshe “did not know much about” them, which drew an admonishment fromthe Court.


G. What is a Responsive Bid?

a. “Responsive Bidder means a person who has submitted a bid whichconforms in all material respects to the Invitation for Bids.” (5 GCA§ 5201(g))

b. Any bidder’s offering (that is, product or service) which does notmeet the acceptability requirements shall be rejected asnonresponsive. (2 GAR § 3109(n)(3).) The IFB shall set forth anyevaluation criteria to be used in determining product acceptability. (Id.)

(1) The acceptability evaluation is not conducted for thepurpose of determining whether one bidder’s item issuperior to another, but only to determine that a bidder’soffering is acceptable as set forth in the IFB. (Id.)

(2) Thus, when bids are tied for lowest bid amount, the award isnot given to the one offering the superior product if all tiedbids meet the minimum specifications. (2 GAR § 3109(o).)

(3) “It is improper to use responsibility-related factors orsubfactors if the evaluation is merely to determineacceptability.” (Nash, Cibinic and O’Neal, p. 271.)

c. A bid is nonconforming if it fails to comply exactly with the literalrequirements of the IFB. However, not all nonconforming bids arenonresponsive. It is critical to determine whether a nonconformitydeals with the responsiveness of a bid or the responsibility of thebidder. Responsiveness deals with the question whether thecontractor has promised to do or provide exactly what theGovernment has requested. (In the Appeal of J&G Construction,OPA-PA-07-005.)

d. Questions of responsiveness are determined “in the bid envelope”,that is, only on the basis of information submitted with the bid andon the facts available at the time of bid opening. (Id.)

e. As a general rule, and contrary to lore, matters that deal with bidderresponsibility cannot be converted into matters of responsivenessmerely by inserting a provision into the IFB requiring production inthe bid envelope of information regarding issues of responsibility,and rejection of bids that do not comply. (Id.) So, not everything“mandated” by the IFB can be considered to affect responsiveness. (Compare the J&G Construction Appeal, with the discussion of“responsive bidder” in In the Appeal of Guam Publications, Inc.,


OPA-PA-08-007 (at part III, D of the Decision, beginning p 13; andnote that J&G Construction was decided subsequently to GuamPublications, and specifically declared its distinctions betweenresponsive and responsible were matters “of first impression”.)

H. “Materiality” only concerns “Responsiveness”: The subject of Bid Mistakes hasbeen introduced above. Here it is again discussed to emphasize that materialityand immateriality are measures of bid responsiveness (“material in all respects”). Thus, immaterial mistakes, though non-conforming, will not render a bid non-responsive.

1. Minor mistakes in a bid are not material so do not make a bidnonresponsive. (But a bid price and terms involves a calculated judgmenton the part of the bidder, and mistakes of judgment are material andcannot be corrected or otherwise changed. (2 GAR § 3109(m).))

2. Minor mistakes include insubstantial matters of form (“minor informalities”)and “insignificant mistakes” that do not “prejudice” other bidders. (2 GAR§ 3109(m)(4)(B).)

a. Matters of bidder prejudice only include factors that affect “price,quantity, quality, delivery, or contractual conditions.” (Id.) Non-negligible factors of price, quantity, quality, delivery or contractualconditions are material and prejudice other bidders. Mattersreflecting on bidder qualifications are issues of responsibility anddo not concern or “prejudice” other bidders because they do notinvolve issues of price, quantity, quality, delivery or contractualconditions. These concepts are often confused, particularly whenthe IFB contains specific requirements concerning the bidder'sresponsibility characteristics – such as the requirement forsubmission of information relating to responsibility.

b. Minor mistakes are immaterial so can be corrected after bid opening,before award. The Procurement Officer shall waive or allow thebidder to correct minor mistakes.

c. Manifest mistakes are “clearly evident on the face of the bid” and“shall be corrected to the intended correct bid and may not bewithdrawn”. Examples include “typographical errors, errors inextending unit prices, transportation errors, and [obvious]arithmetical errors”.

d. Low bids can be withdrawn but not corrected if the mistake isobvious but the intended bid amount is not clearly evident.

e. When a mistake is suspected, the Procurement Officer “shouldrequest the bidder to confirm the bid”. Examples include errors on


the face of the bid or a bid unreasonably lower than the other bidssubmitted. The bidder can confirm, correct or withdraw the bidunder the conditions noted above.

f. Any kind of mistake can allow a bidder to withdraw or correct a bidprior to the time set for bid opening because bids are not firm untilthen.

g. After award, mistakes cannot generally be corrected unless theHead of the purchasing agency determines it would beunconscionable not to allow the correction.

h. Noncompliance with the requirements to provide bid security“requires the bid to be rejected unless ... it is determined that the bidfails to comply in a non-substantial manner....” (5 GCA § 5212(e).)

3. Note that when there is an extraordinary difference in price between theaccepted bid and a lower bid rejected as non-responsive, the materiality ofthe reasons given for rejecting the low bid are closely scrutinized, assessingsuch matters in terms of the dollars associated with the non-responsive itemsagainst the excessively higher bid as a whole, to arrive at, perhaps, adifferent conceptual meaning of “material in all respects”. That is, thequestion of what is material is, to a degree, a question of relativity,dependant upon the facts of a particular case.

a. In her Decision in In the Appeal of O&M Energy, S.A., OPA-PA-08-004, the Public Auditor found “[t]he fact that TEMES’ bid was sixmillion dollars over O&M’s bid indicates that GPA may not havedone sufficient analysis as to the cost of the four items it deemed tobe non-responsive....” (At p 3.)

b. In support of her authority to cancel the bid in that case, the PublicAuditor referred to her jurisdiction “to promote the integrity of theprocurement process and the purposes of [the Procurement Act],” aswell as other case law she cited as holding “t]he purpose of statues,charters or ordinances requiring competitive bidding is to ‘guardagainst favoritism, improvidence, extravagance, fraud andcorruption, and to secure the best work or supplies at the lowestprice practicable and they are enacted for the benefit of the propertyholders and taxpayers, and not for the benefit of enrichment ofbidders, and should be construed and administered as to accomplishsuch purpose fairly and reasonably with sole reference to publicinterest.” (Id.)

c. The Public Auditor found, “GPA did not engage in the requireddetermination of materiality,” adding, “the issue is whether O&Mwas non-responsive, or whether the irregularities found in their bid


submission might be determined to be waiverable [sic]irregularities”. (Id., at p 5.)

I. What is a Responsible bidder?

a. A Responsible Bidder “means a person who has the capability in allrespects to perform fully the contract requirements, and the integrityand reliability which will assure good faith performance.” (5 GCA §5201(f).)

(1) Capability is determined as of the time of award. (2 GAR §3101(1).)

(2) The author has the view that the determination of capabilityis more objectively determined that integrity, which is amore subjective judgment.

(3) A capable bidder is not necessarily responsible if the bidderlacks integrity, nor is a highly respected bidder responsible ifincapable of providing the thing or service the governmentspecifies in the IFB. Each factor, capability and integrity, areindependently essential to a determination of responsibility.

(a) See, In the Appeal of Latte Treatment Center, Inc.,supra, where the Public Auditor held it was error tofail to conduct a separate inquiry into the offeror’sintegrity.

b. Responsibility involves the question whether the contractor can orwill perform as it has promised. (In the Appeal of J&GConstruction, OPA-PA-07-005.)

(1) The issue of distinguishing between a responsive bid andresponsible bidder was a “matter of first impression” beforethe Guam Public Auditor. No prior OPA appeal had raisedor argued the distinction, and many decisions were made onthe lore that an IFB could, by mandate, allow an agency todetermine issues of responsibility by the standard ofmateriality and in the “bid envelope” process used todetermine whether the bid is responsive.

c. Responsibility determinations are made on the basis of allinformation that may be submitted or available up to the time ofaward. (J&G Construction, supra.) Thus, whereas responsiveness isdetermined by the material “in the envelope” at bid opening,responsibility is determined by information available or madeavailable at any time up until an award is made. Contrary to lore,


the IFB cannot alter this rule of law by requiring (“mandating” is aword bandied about) information concerning bidder responsibility tobe submitted in the bid envelope.

(1) Hint: The law and authorities generally (not always) use theterm “evaluate” or “evaluation” when discussing issues ofresponsiveness, but “determine” or “determination” whendiscussing issues of responsibility.

d. Standards of Responsibility (2 GAR § 3116(b)(2): “Factors to beconsidered in determining whether the standard of responsibilityhas been met include whether a prospective contractor has:

(1) “available” the appropriate financial, material, equipment,facility, and personnel resources and expertise, or the abilityto obtain them, necessary to indicate its capability to meetall contractual requirements;

(a) These matters relate to the nuts and bolts ofperformance, and do not refer to the capability toactually render full performance on the date ofaward, but only when required “to meet allcontractual requirements”. Most contracts have atime for performance element, and all that is requiredfor a determination of responsibility is that theprospective contractor has the ability to obtain allsuch elements in time to perform the contract.

(b) In Hawaii, an MPC state, the Office of AdministrativeHearings, Dept. of Commerce and Consumer Affairs,provides the procurement appeals function of theGuam OPA. In a case before that tribunal, it wasdecided that the determination by a procurementofficer that the low bidder was responsible would notbe over-ruled even though, at the time of award, thebidder did not have “the necessary business licensesand permits, employees, equipment, and businessoffice or other facilities” to provide trash removalservices for the Honolulu International Airport. Thetribunal said it was sufficient that the bidder hadshown, before award, the ability to obtain theresources to meet the full contract performancerequirements. (In the Matter of Browning-FerrisIndustries of Hawaii, Inc., PCH-2000-4.) That is, themeasure of responsibility is being able to performwhen required, not necessarily at bid award (ifperformance is to occur sometime later). It is not so


much an issue of readiness to perform but ability toperform when required.

(2) “a satisfactory record of performance;

(3) “a satisfactory record of integrity;

(4) “supplied all necessary information in connection with theinquiry concerning responsibility;” and

(5) “qualified legally to contract with the territory [that is, abusiness license];

(a) Compare Emission Technologies vs. Dick Pacific:

i) In the Appeal of Emission Technologies, Inc.,OPA-PA-07-002, involved an RFP and heldthat the bid of an offeror who does not have alicense to conduct business on Guam at bidopening, especially where the RFP requires abusiness license, is nonresponsive. Arguably,the J&G Construction case overturns theholding in that decision even though it didnot involve an IFB, since “legal qualificationto contract” (as opposed to a specialty licenseto perform a service) is a matter ofresponsibility and may be rectified byobtaining the license after bid opening. Other MPC jurisdictions reach that resultconsistently. In any event, TRCEnvironmental Corporation, SP 160-07,supra, vacated the OPA Decision in EmissionTechnologies, suggesting the business licenseof an offeror in an RFP is not necessary until“consideration of the bidder for the award”(at page 7 et seq.).

ii) “It is improper to use responsibility-relatedfactors or subfactors if the evaluation ismerely to determine acceptability of aproposal.” (Nash, Cibinic and O’Brien, p271.)

iii) The Appeal of Dick Pacific ConstructionCompany, Ltd., OPA-PA-07-007, involved anIFB and held a bid is non-responsive when itfails to include a resume and the bidder fails


to have a Guam business license andspecialty license at bid opening. The result inthat case can possibly be justified based onthe specialty license matter (though theauthor is not convinced; this involved an IFB,not an RFP – see discussion of RFPs below).

iv) A “requirement that bidder possess anoperating license properly relates toresponsibility, notwithstanding solicitationlanguage stating it affects responsiveness”. (Formation of Government Contracts, ThirdEdition, John Cibinic, Jr., and Ralph C. Nash,Jr., CCH/ Wolters Kluwer, p545, citedhereafter as Cibinic and Nash.)

v) Where the thing to be provided incidentallyinvolves use of a specialty service, thatconcerns bidder responsibility, and a bidderwho lacks a specialty license can subcontractto provide that part of the work before award. However, if the specialty service is itself thething to be provided, such as specialtycontractor services, then it deals withresponsiveness.

vi) But consider the necessity of having abusiness license to obtain the benefit of thelocal preference provision (see above). Inthat case, the local preference is a factor indetermining the lowest acceptable bid. Sincethat is a matter determined at bid opening, itshould follow that having a Guam businesslicense is an issue of responsiveness solely forthe purpose of determining if the bid of thebidder claiming the preference is entitled tothe local preference, and not to furtherdisadvantage or penalize an off-island bidder.

(6) Bid or performance bonds should not be used as a substitutefor a determination of bidder or offeror responsibility. (2GAR § 3102(f).)

e. It should be emphasized that “the factors to be considered” includematerial that would never be in a bid package, such as past recordsof performance and reputation, but such matters must be consideredin any event, called for or not. The author takes the view that a


determination of bidder responsibility is a judgment to bedeliberatively made by a balance of any or all such factors ofresponsibility, and that it is a weighing process, not a “tick-the-box”method of trivia gathering. The judgment to be made is simply, doesthe bidder have the capability to perform and the reputation toreasonably conclude the bidder will perform; any one orcombination of the factors of responsibility could, in any particularcase, justify such a judgment.

f. Consider whether Bidder Qualification Statement (“BQS”) issues are”nonresponsive” or “nonresponsible”:

(1) See, In the Appeal of Guam Publications, OPA-PA-08-007:Where GSA ‘mandated’ the requirement of BQS to be a“material part” of the bid, failure to provide it at bid openingmade the bid “nonresponsive”. The author would argue thateverything in the typical IFB BQS concerns bidderresponsibility and the J&G Construction case would overturnthat issue in that decision; such information is not pertinentto responsiveness, only responsibility.

g. The prospective contractor may demonstrate the availability ofnecessary financing, equipment, facilities, expertise, andpersonnel by submitting upon request (§ 3116(b)(3)):

(1) evidence that such contractor possesses such necessary items

(2) acceptable plans to subcontract for such necessary items; or

(3) a documented commitment from, or explicit arrangementwith, a satisfactory source to provide the necessary items.

h. Inquiry into determination of responsibility:

(1) “If such contractor fails to supply the requested information,the Procurement Officer shall base the determination ofresponsibility upon any available information or may findthe prospective contractor nonresponsible if such failure isunreasonable.” (2 GAR § 3116(b)(2)(B).)

(a) The author is of the view that any request forinformation that is plainly insignificant, especiallywhen compared to other more substantial “factors tobe considered”, is of itself unreasonable, and thefailure or refusal to provide that information wouldbe reasonable; but would you want to chance it?


(2) “The inquiry is not required in every case. The extent towhich a review or investigation should be conducted willdepend on the value and size of the procurement, and thebidder’s or offeror’s past record of contract performance inthe public and private sectors.” Official Commentary No. 2,MPC § 3-401.)

(3) When the agency had reason to suspect an offeror’s integrityor other matters bearing on the offeror’s determination ofresponsibility, and does not conduct a responsibility inquiryprior to selecting the offeror as best qualified, it engages in“serious error”. (In the Appeal of Latte Treatment Center,Inc., supra.)

i. The interesting requirement for a writing when making thedetermination of nonresponsibility but not for responsibility:

(1) Before awarding the contract, the procurement officer mustbe satisfied the prospective contractor is responsible (2 GAR§ 3116(b)(4)), but there is no requirement that suchsatisfaction be justified in anything written.

(2) A written determination is only made if the prospectivecontractor who otherwise would have been awarded thecontract is found nonresponsible. (§ 3116(b)(5).)

(a) The written determination of nonresponsibility mustset forth the basis of the finding, be sent promptly tothe nonresponsible bidder, and made a part of theprocurement file.

(b) This indicates that the only party who cansuccessfully appeal a finding in respect ofresponsibility is the bidder who is found to benonresponsible; the decisions generally are verydeferential to the agency when the agency makes afinding of responsibility, but are more careful whendealing with determinations of non-responsibility,which reflect on a bidder’s character and reputation. It has been said that procuring officers have greaterdiscretion when dealing with issues of responsibilitythan issues of responsiveness, meaning theirdiscretion to determine responsibility is greater thantheir discretion to judge responsiveness.

(c) Recall the Browning-Ferris Matter from Hawaii,supra. At first blush, it seems incredible that a bidder


who lacked so many qualifications could be foundresponsible. But the appeal tribunal there did notmake a finding that the bidder was responsible. What the appeal tribunal decided was that it wouldnot sustain the appeal of a higher bidder to overturnthe procurement officer’s determination ofresponsibility. Thus, higher bidders have a veryheavy burden to overturn any determination ofresponsibility; they, in effect, must prove theprocurement officer’s determination of responsibilitywas the result of clearly unreasonable error, fraud orother serious fault, such as, perhaps, ethicalviolations.

(3) In contrast to the many requirements in the procurementregulations for the making of written determinations andkeeping of records, there is no requirement that the findingof responsibility be written or recorded. Why is that?

(a) Consider the policy implications when questioningwhy the government should be given wide discretionto determine that a bidder/offeror is responsible. Remember, it is the “prospective contractor’s”responsibility that is in question, that is, the lowestresponsive bidder. It is in the government’s interestto acquire the lowest price. By placing too preciousa standard on bidder responsibility, or by allowinghigher bidders to complain too critically about thelow bidder, the procurement regulations would tendto defeat that low price objective.

(b) Consider the policy implications when questioningwhy the government should be required to justify adetermination of nonresponsibility. The key factorsto responsibility are judgments of capability andintegrity, boiled down to character. Labelingbidders “nonresponsible” is seen as almostslanderous of their trade and reputation. Thecommon law has long protected an individual’scharacter and reputation, requiring strong proof ofthe slanderous label and objective communitystandards, and this is reflected in the requirements forfindings of nonresponsibility. The author suggests,therefore, that it would be good practice that anydetermination of nonresponsibility differentiatebetween any findings of capability and of integrity, soas to minimize any imputation of lack of integrity if


the basis for the nonresponsibility determination islack of capability.

(4) “Qualified Bidder lists”: The GSA has recently beenpublishing notices “to all interested vendors/contractors”advising it is in the process of establishing “a vendor list”,and soliciting the identities and interests of potentialcontractors. The contractors are asked to submit a copy ofbusiness license, company address, contact name and phoneand fax number, together with their “area of interest”, suchas hardware supplies, auto repair services, etc. This isintended to establish “solicitation mailing lists” (5 GCA §5231), commonly referred to as “qualified bidder lists”.

(a) Since solicitations are generally meant to be initiatedby distributing and mailing solicitations to potentialcontractors (see “bidding timing”, above), this is aperfectly sensible thing to do, and all potentialcontractors should provide that information to GSA(and keep it current) if they have any desire to obtainGovGuam business.

i) This is broadly reminiscent in notion to theFederal government’s Central ContractorRegistration (http://www.ccr.gov/ ), but theCCR is much more blinkered and restrictivethan the local procurement requirements toseek out competition.

(b) Prospective suppliers may be prequalified forparticular types of supplies, services andconstruction. Solicitation mailing lists of potentialcontractors shall include but shall not be limited tosuch prequalified suppliers. (5 GCA § 5231.)

(c) Distribution of solicitation shall not be limited toprequalified contractors, nor may a prospectivecontractor be denied award simply because suchcontractor was not prequalified. (2 GAR §3117(a)(1).)

(d) The fact that a prospective contractor has beenprequalified does not necessarily represent a findingof responsibility. (Id.)

(e) There is nothing to prohibit GovGuam from solicitingany information about any need or upcoming

http://www.ccr.gov/


solicitation or prospective bidder qualifications;indeed, there is much merit in that. But, suchinformation gatherings are not source selections,cannot take the place of proper source selectionsolicitation, and should not preclude or disadvantageany potential contractor who did not respond to theinformation request from taking part in thesolicitation, nor favor any potential contractor whodid.

J. A Note on “All or None” bids: Why not take part of me?

1. The standard General Terms and Conditions for GovGuam IFBs has a clausethat reads something like this, taken from a recent GPA bid:

“ALL OR NONE” BIDS: Unless otherwise allowedunder this Solicitation, “all or none” bids may bedeemed to be non-responsive. If the bid is solimited, the Government may reject part of suchproposal and award on the remainder. NOTE: Bychecking this item, the Government is requesting allof the bid items to be bidded [sic] or none at all. TheGovernment will not award on an itemized basis. Reference: Section 3-301.06 of the GuamProcurement Regulations.”

2. The first part of this provision is OK, but the second part in the “Note” iscomplete lore. Lore would have it that the government can force a bidderto bid all items in the solicitation, otherwise the bid is non-responsive, evenif the bidder’s prices on the selected items bid are lowest. This is wrong fortwo reasons, at least:

a. First, the referenced regulation (3-301.06) does NOT say that thegovernment has the power to choose “all or none”, so does not at allsupport the proposition made in the “Note”. (See 2 GAR § 3115(f),the current codification of the regulation.) The regulation expresslygives the bidder, not the government, the power to make its ownbid “all or none”, unless the IFB specifically disallows that choice. Ifthe IFB is silent and thereby allows such a bid, the government islimited to either accepting the bid as a whole or rejecting it. That isthe gist of the first part of the “all or none” clause, and thereferenced regulation makes that part of the clause proper.

b. Second, the claim that “the government will not award on anitemized basis” runs contrary to an express legal requirement:

(1) “Each solicitation issued by the territory shall provide that


any bid or proposal may be rejected in whole or in partwhen in the best interest of the Territory....” (2 GAR §3115(e)(2); see, 5 GCA § 5225.)

(2) Clearly, the government cannot waive its right to reject in thepart. It is a legal requirement that GovGuam must be able to“cherry pick” amongst the bids to obtain the best prices foritems, and any “mandated” provision in an IFB whichstymies that requirement is contrary to the law.

(3) Recall also the policy of the law mentioned above, “toprovide increased economy in territorial activities and tomaximize to the fullest extent practicable the purchasingvalue of public funds of the Territory”. Any provisioninserted in an IFB which prevents the government fromcherry picking amongst the bids defeats that policy.

c. Further, consider the anti-competitive effect if a bidder can beat thepants off all others on 95% of the items, but does not have a productin its lineup for the other 5%. By eliminating that vendor’s ability tobid the solicitation only because the vendor lacks the full range ofproducts sought, the government loses the benefit of the vendor’slow cost on most of the items, and the vendor loses the business tohigher cost competitors. This is particularly anti-competitive if anIFB can be purposefully structured to achieve that end.

K. Wage Determination issues: For a discussion of the application of WageDetermination law to procurement, see the discussion of In the Appeal of AdvanceManagement, Inc., in the review section at the end of this outline.

VII. MULTI-STEP SEALED BIDDING (2 GAR § 3109(r))

A. This is a variant of a competitive sealed bid method of source selection, being atwo-phase process consisting of a technical first phase where offerings are evaluatedfor product acceptability, and a second phase where the lowest bid is picked fromamongst all the bidders with acceptable offerings. It is solicited by an IFB anddefined by the specifications of the IFB.

B. Multi-Step bidding is not the same thing as competitive sealed bidding and cannotbe used interchangeably with competitive sealed bidding, even though theregulations – but not the law (5 GCA § 5211(h)) – might imply it is an equalalternate form of competitive sealed bidding (2 GAR § 3109(a)). This distinction isimportant because of the policy preference for competitive sealed bidding.

C. Multi-step bidding “is designed to obtain the benefits of competitive sealed bidding


... and at the same time [obtain] the benefits of the competitive sealed bid proposalsprocedure....” (2 GAR § 3109(r)(1).)

1. The competitive sealed proposal method of source selection was initiallyadopted as part of the Guam Procurement Act but was impliedlydisapproved by the Legislature when that method was repealed in 1985 (PL18-8:8). Competitive sealed proposals are no longer allowed under Guamlaw or regulation. (Fleet Services, Inc. v. Dept. of Administration, 2006Guam 6, ¶15.)

2. Although competitive sealed bidding is the preferred method of sourceselection, the repeal of the competitive sealed proposal method indicatesthe multi-step bidding process does not carry the same favor.

3. Multi-step bidding can only be used “when it is not practical to prepareinitially a definitive purchase description”. (Sub§(r)(2).) “Purchasedescription” is the same thing as “specification”. (See, Specifications,below.)

4. It is noted that OPA has recently published notice of a multi-step bidsolicitation for office space. Real property is generally thought of as beingunique, and every “piece” of real property has its own characteristics,unlike, say, standard commercial items such as air conditioners, pick-uptrucks and copiers. But, for purposes of appreciating the appropriate use ofthis method, consider whether it would be appropriate when limited to, forinstance, condominiumized (thus, multiple owned) office space in aparticular building where every office had identical floor plans.

D. The first phase can consist of further multiple steps. See, generally, 2 GAR §3109(t).

1. The first phase technical offer submissions are unpriced or have sealedprices and are not publically opened.

2. It is contemplated that discussions of the technical aspects of the technicaloffer can be conducted between the procurement officers and the bidderssolely “for the purpose of facilitating understanding of the technical offerand purchase description” of the IFB.

a. Discussions are only conducted “to evaluate and determine theacceptability of technical offers.” (2 GAR §§ 3109(r)(1), (r)(2)(a).)

b. It follows from this that, during the phase one discussion, whereappropriate, technical offers can be amended and supplementalinformation may be provided by the offerors to demonstrate theacceptability of their offers, and the government may make minoramendments to the IFB purchase description to reflect a better


knowledge of what offerors may reasonably be expected to offer. (2GAR § 3109(r)((2)(b).) Bear in mind that purchase descriptions aremeant to be drafted, and therefore amended, so as to maximizecompetition while acquiring the essential functions required to meetthe Territory’s minimum needs, as discussed in the Specificationssection below.

c. If any contemplated amendment to the IFB specifications “willsignificantly change the nature of the procurement”, the IFB mustbe cancelled (sub§(r)(2)), and presumably re-bid.

d. Information derived from one offeror is not supposed to be disclosedto any other offeror during these discussions. (2 GAR § 3109(t)(5).)

3. The technical offers are evaluated in the first phase “solely in accordancewith the criteria set forth in the” IFB. (Sub§ 3109(t)(4).)

a. The evaluation is not intended to rank the offers in any way (unlikeRFPs for services which do engage in a ranking process). Rather, thetechnical offers are only to be categorized as either:

(1) acceptable, that is complies with the minimum specificationsof acceptability, or

(2) potentially acceptable, that is, “reasonably susceptible ofbeing made acceptable”, or

(3) unacceptable.

b. Unacceptable offers are tossed out and not further considered, butthe procurement officer must make a written record of the basis forthe unacceptability. (Sub§3109(t)(4)(c).)

c. Potentially acceptable offers must be made acceptable bydiscussions and amendment of the offer or the specifications, asmentioned above, before the time set for opening of the priced bids. If not, potentially acceptable bids are treated as unacceptable.

d. As mentioned above, “[i]t is improper to use responsibility-relatedfactors or subfactors if the evaluation is merely to determineacceptability of a proposal.” (Nash, Cibinic and O’Brien, p 271.) Any negative responsibility-related factors can only be used todisqualify the offeror as non-responsible in an appropriatelyconducted inquiry into and determination of responsibility, not toreject the offer as unacceptable, which is the functional equivalentof being non-responsive. (Offerings which do not meet theacceptability requirements shall be rejected as nonresponsive; 2


GAR § 3109(n)(3).)

e. Compare the RFP process for professional services, which, unlikephase one evaluations, does involve ranking of best qualified offers,and which does allow responsibility-related factors to be consideredin assessing the relative order (the rank) of the competing qualifiedoffers, as discussed below.

4. Discussions are only had or continued with acceptable or potentiallyacceptable bidders to further refine the offers and specifications, not withunacceptable offerors. “Once discussions are begun, any bidder who hasnot been notified that its offer has been finally found unacceptable may [atits own behest or on the request or suggestion of the government] submitsupplemental information amending its technical offer at any time until theclosing date....” (sub§ 3109(t)(5)), but unacceptable offers are not affordedthat opportunity (sub§ 3109(t)(6)).

a. Note that this implies that there is an initial screening forunacceptable and potentially acceptable offers before discussionsbegin, based solely on the offer documents. If so, discussion areonly had with “potentially acceptable” and “acceptable” offerors.

5. Phase two is initiated once the procurement officer determines “there aresufficient acceptable unpriced technical offers to assure effective pricecompetition” without further discussions or amendments to thespecifications. (Sub§ 3109(r)(4).)

a. Bid prices are not to be considered during phase one, only phasetwo. (2 GAR § 3109(r)(1).)

b. Phase two is conducted by opening priced bids from all acceptabletechnical offerors, and determining the lowest bidder as incompetitive sealed bidding, except only the winning bidder’stechnical offer is publically disclosed. (Sub§ 3109(v).)

(1) The priced bids are submitted sealed, either with the originaltechnical offers or after phase one, depending on therequirements of the IFB as originally issued.

VIII. REQUESTS FOR PROPOSALS

A. Competitive sealed proposals are not allowed. See above.

1. “The Guam Legislature ... repealed [the prior provision allowing competitivesealed proposals] when it passed section 8 of Guam Public Law 18-8.... The


repeal of the statute repealed the corresponding regulation.” (Fleet Services,Inc. v. Dept. of Administration, 2006 Guam 6, ¶ 15.)

B. Requests for Proposals (RFPs) are only allowed for “professional services”.

1. Only the services of “accountants, physicians, lawyers, dentists, licensednurses, other licensed health professionals and other professionals” areprocured by a Request for Proposals. (5 GCA §§ 5216, 5121(a).)

2. The issuance of an RFP for the operation, management and maintenance ofthe Guam Mass Public Transit System was improper, since that did notinvolve the procurement of “professional services”. (Fleet Services, Inc.,supra, ¶34.)

3. Bad debt collection services must be procured by competitive sealed bidbecause they do not fall within the “professional services” exception for anRFP. (In the Appeal of Oceania Collection Services, OPA-PA-08-006.)

C. The procurement process for RFPs is built around a negotiation process, and has itsown procedural requirements. See generally, 2 GAR § 3114.

1. “Competitive selection procedures shall be used” when the contractamount is over $5,000, otherwise “small purchase procedures” (discussedbelow) when under that amount. (§ 3114(b).)

2. A detailed determination must be made before undertaking anyannouncement of “need for services” requiring competitive selectionprocedures (§ 3114((d)), which includes:

a. the nature of the relationship to be established between the usingagency and the contractor

b. the using agency has developed, and fully intends to implement, awritten plan for utilizing such services, which will be included in thecontractual statement of work.

3. The “need for services” is essentially the RFP, and “adequate public notice”of it must be given at least 10 days in advance of due date. Public notice isto be given in the same manner as competitive sealed bids (see above) and,“additionally shall consist of distributing Requests for Proposals to personsinterested in performing the services”. (§ 3114(e.)

4. The contents of the RFP is specified in § 3114(f), and includes detailedinformation regarding the persons (and their qualifications) who will beproviding the services.

a. Note that in this instance, such personnel information is an issue of


responsiveness because those services are precisely what is beingsought, whereas, when products and other things are being sought,such personnel issues are incidental and go to issues ofresponsibility.

5. As in the competitive sealed bid process, proposals must only be evaluatedbased on factors stated in the RFP. (§ 3114(f)(2).)

6. Unlike the phase one acceptability determination in the multi-step bidprocess (see above), the offerors in an RFP are, after evaluation, ranked inorder of “best qualified”. (§ 3114(l).) Remember, RFPs are only allowedfor solicitation of professional services, so the only authorized process ofranking offers allowed anywhere in the Procurement Act is in the context ofsolicitation of professional services; in all other cases, lowest cost prevails.

a. While normally responsibility-related factors must not be used toevaluate bids or offers, the evaluation of such factors for the solepurpose of ranking offerors already evaluated as qualified, isappropriate in the RFP process.

b. “Agencies commonly evaluate factors and subfactors related toresponsibility, notwithstanding the fact that a formal responsibilitydetermination must ultimately be made before award of thecontract. Such factors and subfactors frequently include experience,staffing, and past performance. This process does not officiallyconstitute a responsibility determination as long as these factors areevaluated on a variable basis.... In Electrospace Sys., Inc., 58Comp.Gen. 415 (B-192574), 79-1 CPD ¶ 264, the ComptrollerGeneral stated at 425: ‘Since neither 10 U.S.C. § 2304(g) norapplicable regulations in any way restrict “other factors” that may beused by agencies in selecting the proposal having the greatest valueto the Government, we have not prohibited procuring agenciesfrom using responsibility-related factors in making relativeassessments of the merits of competing proposals....’” (Nash,Cibinic and O’Brien, p 270.)

7. Once ranked, negotiations are begun with the most best qualified offerorover compensation, that is, the price to be paid for the services sought, andthen on down the list from most best qualified until an agreement is reachedwith a qualified offeror. This parallels the multi-step process where pricesare not discussed or considered until acceptability of product is determined. And, similarly, it would seem to be improper for the government to try torenegotiate the ranking or qualification of the offerors once the process hasmoved to haggling over price.

a. The purpose of negotiations is to reach agreement on compensation which must be “determined in writing to be fair and reasonable”


(which presumably means to both parties, but the author is notmaking that call without further research).

b. The government must negotiate in good faith with each qualifiedofferor in turn and cannot move on to the next one until a higherqualified offeror has made its best and final offer and adetermination has been made whether the offer is “fair andreasonable”. (See, In the Appeal of Great West Retirement Services,OPA-PA-07-006, where the Public Auditor concluded the agencyarbitrarily and capriciously ended negotiations with a best qualifiedofferor without a determination the best and final offer “was not fairand reasonable.”)

c. The award is given to the first best qualifier to conclude acceptableprice negotiations with the agency. “Award of a contract [under anRFP] requires two elements: a determination that the offeror is thebest qualified, and successful negotiations of fair and reasonablecompensation.” (Id.)

d. Unless the solicitation states otherwise, proposals need not beunconditionally accepted by the government. This flexibility mustbe considered in determining whether reasons exist for rejecting allor any part of a proposal. (2 GAR § 3115(3)(3(B).)

8. When the dust settles and an award noticed, the agency must prepare awritten memorandum, available for public inspection, including details ofhow the evaluation factors were applied to determine the best qualifiedofferors and the principal elements of the negotiations, including significantconsiderations relating to price and other terms of contract.

9. Each agency is required to submit annual reports identifying every RFPissued in the preceding year to the CPO.

D. Architectural, engineering and land surveying vs. construction services

1. There is a curiosity in the structure of the procurement law as regardsconstruction services. Are they procured as “professional services”, so canescape the requirements of competitive sealed bids, or not?

2. The statutory definition of “professional services” above does notspecifically include them. 5 GCA § 5216(a), which defines when an RFP forprofessional services can be used, says “services for architecture,engineering, construction, land surveying, environmental assessment andother such services shall be procured in accordance with Article 5 of thisChapter.” But Article 5 only deals with the “alternative methods ofconstruction management” (5 GCA § 5302) and not methods of sourceselection, that is, the procurement methods. 5 GCA § 5301 does, however,


refer to “professional services within the scope of the practice ofarchitecture, professional engineering, or land surveying”.

3. The regulations refer to the professional services method of source selectiononly for architecture, professional engineering, or land surveying servicesand not the more broadly described “construction” services.

a. The provision of these Regulations applies to every procurement ofservices within the scope of the practice of architecture, professionalengineering, or land surveying.... For the purpose of acquiring theservices, described in this Chapter the provisions of §3114(Competitive Selection Procedures for Services, specified in §2112)of this Guam Procurement Regulations shall be followed. (2 GAR §5108.)

4. It appears to be a sensible conclusion that when procuring the professionalservices of architecture, professional engineering or land surveying bythemselves and not as a component of a construction contract, an RFPwould be allowed. However, when procuring a thing to be constructedwhich necessarily involves such services, competitive sealed bidding isrequired.

a. Example: “Bid security shall be required for all competitive sealedbidding for construction contracts when the price is estimated bythe Director of Public Works to exceed $25,000.” (2 GAR §5103(1).)

IX. UNSOLICITED OFFERS

A. “An unsolicited offer is any offer other than one submitted in response to asolicitation.” (5 GCA § 5219.) This would seem to include any “proposal”, “pitch” or marketing of any item or service to GovGuam which includes price andother terms capable of being accepted, and likely includes any offer capable ofbeing negotiated for acceptance.

1. Remembering that procurement law is intended to stylize and regularize thebasic contract formation process, the author takes the view that an“unsolicited offer” must be one that is substantively equivalent to an offer inthe usual contract law sense. That is, it is a communication (or series ofcommunications) given by an offeror which empowers the offeree to simplysay “I accept” and thereby create a contract. Thus, mere negotiation orsupplying information or other such communications which would notripen into a contract upon “I accept” should not trigger the unsolicited offerstatute. But, as in contract formation issues broadly, this can be a grey area,a minefield of ambiguity, and vendores are advised to tread warily.


Providing a brochure and price schedule could easily be taken to be abinding offer in any given factual circumstance.

B. Old procurement law allowed unsolicited offers to be evaluated and processed forprocurement as a “sole source”. This was negated and reversed in 1999 by PL25:31:2, currently codified as 5 GCA §5219. Now, unsolicited offers must beprocessed by the competitive sealed bid procurement method.

1. “All unsolicited offers considered as being desirable shall be subjected tothe Competitive Sealed Bidding process under § 5211.” (5 GCA §5219(e).) This means that none of the alternative methods, such as smallpurchase or emergency procurement can be used for unsolicited offers,because they are identified in § 5210(a), not in § 5211 .

2. Note that the Regulations (2 GAR § 3104) have not been updated to reflectthe change in law, although, as was held in the Fleet Services, Inc. case,above, the change in law consequentially voids any inconsistent orunauthorized regulation.

C. “Notwithstanding any other provision of law, sole source procurement shall not bepermissible in any procurement arising from an unsolicited offer. The criteria setforth in the [IFB] shall not require the inclusion of any proprietary item proposed inthe unsolicited offer, and the proprietary character of an unsolicited offer or theinclusion of a proprietary item in the unsolicited offer shall not be used to favorthe offer or any other bid, nor be a determining factor in awarding a bid.” (5GCA § 5219(e).)

X. SOLE SOURCE

A. “A contract may be awarded for a supply, service, or construction item withoutcompetition when ... there is only one source for the required supply, service orconstruction item.” 5 GCA § 5214.) Heads of purchasing agencies are “authorizedto determine whether a supply item ... shall be included as a part of, or procuredseparately from, any contract for construction”. (2 GAR § 3107.) Sole source, then,is not appropriate for construction contracts. Also, it would be improper to use asole source solicitation that includes, as part of the IFB, any item which does notqualify for sole source solicitation.

B. “A requirement for a particular proprietary item does not justify a sole sourceprocurement if there is more than one potential bidder or offeror for that item.” (2GAR § 3112(b).)

C. “In cases of reasonable doubt, competition should be solicited. Any request by ausing agency that a procurement be restricted to one potential contractor shall beaccompanied by an explanation as to why no other will be suitable or acceptable


to meet the need.” (Id.)

D. The CPO, DPW Director or Head of the Purchasing Agency, “or their designeeabove the level of Procurement Officer” must determine in writing that there is onlyone source for the required supply, service or construction item. (5 GCA § 5214.)

E. A record of all contracts made under the sole source procurement shall bemaintained and a copy of such record shall be submitted to the Legislatureannually. (2 GAR § 3112(d).)

F. When conducting any sole source procurement, the procurement officer shallconduct negotiations, as appropriate, as to price, delivery and terms. (2 GAR §3112(c).)

G. Examples of appropriate sole source circumstances are (2 GAR § 3112(b)):

1. Where the compatibility of equipment, accessories, or replacement parts isthe paramount consideration.

2. Where a sole supplier’s item is needed for trial use or testing.

3. Where a sole supplier’s item is to be procured for resale.

4. Where public utility services are to be procured

5. Where supplies are offered through bankruptcy or receivership sales, orother disposition at lower than prevailing market rates.

H. An example of when sole source procurement is not appropriate is in the PublicAuditor’s Decision in In the Appeal of Town House Dept. Stores, Inc., dba IslandBusiness Systems and Supplies [IBSS], OPA-PA-08-011, p 13: “Here, the fact thatXEROX provides copying services and equipment does not justify a sole sourceprocurement determination because XEROX is not the only possible source ofcopier services and equipment.”

I. “This method of procurement involves no competition and should be utilized onlywhen justified and necessary ....” (Official Comment, MPC § 3-205.)

XI. SMALL PURCHASE PROCEDURES

A. Small purchase procedures exist for procurement of less than $15,000 for suppliesor services and less than $50,000 for construction when other methods are notutilized, but if there is only one source for such procurement, the sole sourcemethod must be used. (2 GAR §§ 3111(a), (3111(b)(4).)


B. Procurement requirements shall not be artificially divided so as to fall within the small purchase limits. (5 GCA § 5214.)

C. For really small purchases, there are competition requirements for supplies andservices in the $500 to $15,000 bracket (2 GAR § 3111(c):

1. Insofar as is practicable, no less than three positive written quotations shallbe solicited, recorded and placed in the procurement file, with award to thelowest responsible and responsive bidder. This file is a public record.

D. Really, really small purchases of supplies and services under $500 can beconducted by operational procedures which “provide for obtaining adequate andreasonable competition and for making records to properly account for funds andto facilitate auditing....” (2 GAR § 3111(e).)

E. Procurement of construction is subject to similar rules, with the two brackets being,(1) between $500 and $50,000, and (2) under $500. (2 GAR § 3111(d).)

F. Similar concepts are applied for “accountants, physicians, lawyers, dentists,architects, engineers, or land surveyors”. (2 GAR § 3111(f).)

G. See, General Services Agency, Small Purchases, Procurement Function,Performance Audit, October 1, 2001 through June 30, 2003, OPA Report No.04-05, March 2004, http://www.guamopa.org/docs/OPA0405.pdf

H. REQUEST FOR QUOTATION (RFQ)

1. Requests for Quotations are only specifically mentioned in respect of smallpurchases (§ 3111(c)(1): “no less than three positive written quotations frombusinesses shall be solicited”) and emergency procurements (§ 3113: “theprocurement agent must solicit at least three informal price quotations”).

2. Except in those limited circumstances, RFQs are not authorized methodsof source selection.

I. BLANKET PURCHASE AGREEMENTS (BPAs) (2 GAR § 3112.1):

1. A BPA is a purchase agreement to establish a “charge account” to acquireand indefinite quantity or type of supplies or services. (2 GAR §3112.11(a).) It is thus contemplated that it is intended where there would otherwise benumerous purchase orders for a broad class of goods (e.g., hardware). Alsocontemplated are BPAs made with dependable firms with proven priceswhich are considerably lower than other firms dealing in the samecommodities (§ 3112.12(d)), but they should be contacted to securemaximum discounts. (§ 31121.12(f).

2. Individual purchases under BPAs shall not exceed $15,000 for supplies or



services or $50,000 for construction. (§ 3112.13(b).)

3. The use of a BPA does not authorize purchases that are not otherwiseauthorized by law or regulation. (§ 3112.13(a).)

4. The existence of a BPA does not justify purchasing from only one source. Wherever possible, the purchasing officer must provide for equaldistribution of the blanket purchase to at least three separate vendors. (§3122.13(c).) Remember, a BPA is essentially an open account with avendor. The government is required to spread the business around accountsand not favor any one (“equal distribution”).

5. If there is an insufficient number of BPAs to select from, the purchasingofficer is directed to go out and solicit more competition and establish moreBPAs. (§ 3112.13(d).)

6. “All competitive sources should be given an equal opportunity to furnishsupplies or services under BPAs. Therefore, if not impossible, then to theextent practical, BPAs for items of the same type should be placedconcurrently with at least three separate suppliers to assure equalopportunity.” (§3112.12(d).)

7. See, General Services Agency, Blanket Purchase Agreements, ProcurementFunction, Performance Audit, October 1, 2001 through June 30, 2003, OPAReport No. 04-08, July 2004, http://www.guamopa.org/docs/OPA0408.pdf

XII. EMERGENCY PROCUREMENT (5 GCA § 5215)

A. Requires an existing “threat to public health, welfare, or safety under emergencyconditions”. There must be a written determination of the basis for the emergency,made under penalty of perjury by the CPO, Director DPW or Head of thePurchasing Agency, unless there is a Governor’s declaration of emergency byExecutive Order which specifically states that emergency procurement may beresorted to for the purposes of the order. Where there is no Governor’s emergencyExecutive Order, as a condition of any procurement award, the certifieddetermination must be given to the Governor and Speaker; and, the Governor mustapprove in writing all authorizations for emergency procurement.

B. “Emergency means a condition posing an imminent threat to public health, welfare,or safety which could not have been foreseen through the use of reasonable andprudent management procedures, and which cannot be addressed by otherprocurement methods of source selection.” (2 GAR § 1106(47).)

1. One might question the repeated uses of declarations of emergency to skirtnormal procurement in circumstances due to poor management leading toconditions that were clearly foreseen or foreseeable, e.g., Executive Orders



2008-16 (GPSS) and 2008-17 (DPW).

C. “Emergency procurements shall be made with such competition as is practicableunder the circumstances”.

D. The procurement agent must solicit at least three (3) informal price quotations and,if time allows, must give notice to all contractors from any qualified bid list.

E. Award goes to the “firm with the best offer, as determined by evaluating cost anddelivery time.” (Query: does this take issues of bidder responsibility out of theequation?) A written determination of the basis for the selection of the contractorshall be included in the contract file.

F. LIMITED TO 30 DAY SUPPLY: No emergency procurement or combination ofemergency procurements may be made for an amount of “goods or supplies”(which does not speak to construction) greater than the amount of such goods andsupplies which is necessary to meet an emergency for the thirty (30) day periodimmediately following the procurement.

G. The law contemplated that the Policy Office would draft regulations which furtherdefine “emergency conditions”, but they have not done so: the only regulation onthe subject, 2 GAR § 3113, refers to a sub§ 3113(b) for such definition, but it doesnot appear in the Guam Compiler of Laws’ regulations.

XIII. FEDERAL SUPPLY SCHEDULE PURCHASES MUST ADHERE TO SPECIFIED METHODS OFSOURCE SELECTION

A. For its own purposes, the US Federal Government has established a specializedfacility that allows government purchasers, pursuant to processes specified in theFARs, Subpart 8.4 http://www.acquisition.gov/far/current/html/Subpart%208_4.html,to directly purchase certain supplies and services directly from pre-approved privatecontractors/vendors. This facility is known as the GSA Supply Schedule or “FSSP”(Federal Supply Schedule Program).

B. A review of this program is beyond the scope of this paper, but see http://www.gsa.gov/Portal/gsa/ep/contentView.do?contentType=GSA_OVERVIEW&contentId=8106 . “GSA Schedules offer customers direct delivery of millions ofstate-of-the-art, high-quality commercial supplies and services at volume discountpricing.” The FSSP is analogous to buying from an online catalogue of supplies andservices, each offered by different supply contractors at varying prices and uponvarying terms, depending on the contractor chosen.

C. The Federal government has authorized GovGuam to access the Supply Schedulecontractors, which is a discretionary privilege and not a right. To be an approvedSupply Schedule contractor, the Federal government requires certain standards and

http://www.acquisition.gov/far/current/html/Subpart%208_4.html

http://www.gsa.gov/Portal/gsa/ep/contentView.do?contentType=GSA_OVERVIEW&contentId=8106

http://www.gsa.gov/Portal/gsa/ep/contentView.do?contentType=GSA_OVERVIEW&contentId=8106


generally extracts the “best customer” price from the contractors with its purchasingmuscle. This has the potential to provide GovGuam cost savings on SupplySchedule supplies and services. Most US Federal agencies can directly access theschedule contractors and directly purchase scheduled supplies and services withoutnormal competitive procedures, although the applicable FARs do have their owncompetitive requirements for such purchases. The FARs, however, require otherordering activities such as GovGuam to make their purchases “consistent with[their own] statutory and regulatory requirements applicable to the acquisition ofthe supply or service” (Subpart 8.404(c)(3).

D. The Guam Procurement Act puts a limit on the privilege granted by the Federalgovernment to GovGuam to access the FSSP.

1. “The [Guam] General Services Agency shall procure supplies from theUnited States when the cost to the [Guam] General Services Agency is lessby ten percent (10%) than from other contractors.” (5 GCA § 5122)

2. The intent and purpose of this clause is vague and without any extantexplanation. Lore has it that the provision is intended to provide a “localpreference” for other bidders, even though there is a separate express “localpreference” provision, discussed above, and even though there is nomention at all of the word “local” in the provision.

a. In fact, the local preference provision contemplates a greater, 15%,differential, which must also be considered if the FSSP contractor isfrom off-island. The intent of § 5122 cannot be to create a localpreference right if a greater right is more specifically created by otherstatute.

3. Some have argued § 5122 implies authority and direction to Guam topurchase from Federal Supply Schedule Program, but, of course, only theFederal government can authorize who can purchase from its programs. This argument is based on a restrictive reading of the dependent clause“shall procure supplies”, without reference to clearly conditional “when”clause and the 10% limitation it expresses.

4. § 5122 refers to “contractors”, but Guam procurement law refers to“contractor” only when discussing a post-award party. Prior to award, thatis, at the stage where a vendor is being considered as a supplier, theprocurement laws refer to “bidders” and “offerors”, or, and only when thelowest responsive bidder has been selected, a “prospective contractor”.

5. Considering the historical context of the provision as well as the particularlanguage used in it compared to the language used elsewhere in theProcurement Act, the author surmises that experience would have revealedthat simply buying from one contractor on the Schedule does not assure thelowest price offered by all Schedule contractors.


6. The author concludes that §5122 is intended simply to make sure that,when GovGuam buys from the Federal Supply Schedule, it must considerall the supply items available from all the Schedule contractors, and not buyfrom a more expensive contractor if there is another contractor on theSchedule offering a similar item for at least a 10% lower price.

E. Lore has had it that the FSSP is a way to “bypass the bid process”. (See, (In theAppeal of Town House Dept. Stores, Inc. dba Island Business Systems and Supplies[IBSS vs. GPSS], OPA-PA-08-011, p 10.) Guam GSA has long purchased directlyfrom the Federal Supply Schedule contractors according to its own procedures, incomplete disregard of Guam procurement law and regulation. And the AttorneyGeneral has, through more than one opinion, long provided legal cover for GSA todo so, saying specifically in its Legal Memorandum dated June 16, 2008(“Purchasing from GSA Federal Supply Schedule Procedure”) that § 5122authorized another method of source selection beyond those specified in 5 GCA §5210(a).

F. The Public Auditor has recently ruled that § 5122 does not provide any exceptionto the specific methods of source selection specified in §5210(a) and thosemethods, such as competitive sealed bid, must be used when making any purchasefrom the Federal Supply Schedule contractors. She also ruled that GSA does nothave the authority to adopt any other method of source selection. (Town HouseDept. Stores, Inc. dba Island Business Systems and Supplies [IBSS vs GSA], OPA-PA-08-012.)

XIV. SPECIFICATIONS

A. SPECIFICATIONS ARE THE BEDROCK OF PROCUREMENT: “The purpose of aspecification is to serve as a basis for obtaining a supply ... item adequate andsuitable for the territory’s needs in a cost effective manner.... It is the policy of theterritory that specifications permit maximum practicable competition consistentwith this purpose. Specifications shall be drafted with the objective of clearlydescribing the territory’s requirements” (2 GAR § 4102(a)(1).) Thus, the mostcritical and first step in planning and soliciting is to get the specifications right.

B. “Unless the context requires otherwise, the terms specification and purchasedescription are used interchangeably throughout these Regulations”. (2 GAR§4101(4).) “Purchase description”, simply defined (see 2 GAR §1106(26)), means“the words used in a solicitation to describe the supplies”.

C. MINIMUM NEEDS: The specifications in the IFB “shall include only the essentialphysical characteristics and functions required to meet the Territory’s minimumneeds”. (5 GCA § 5268(a).) Bells and Whistles, status symbols, ego trips, and the95% of the functions you never use should not be part of specifications.


1. You can't always get what you wantBut if you try sometimes you might findYou get what you need (– The Rolling Stones).

D. UNDULY RESTRICTIVE: All specifications shall seek to promote overall economyand encourage competition in “satisfying”, not exceeding, the territory’s needs, andshall not be unduly restrictive. (2 GAR § 4106)

E. “It is the general policy of this territory to procure standard commercial productswhenever practicable. In developing specifications, accepted commercial standardsshall be used and unique requirements shall be avoided to the extent practicable.” (2 GAR § 4102(a)(3))

F. NON-PROPRIETARY: All specifications shall be written in such manner as todescribe the requirements to be met without having the effect of exclusivelyrequiring a proprietary supply item, or procurement from a sole source, unless noother manner of description will suffice, and in that event, a written determinationshall be made that it is not practicable to use a less descriptive specification. (2GAR § 4106(a).)

G. Purchase descriptions shall not specify a product having features which are peculiarto the products of one manufacturer unless it has been determined in writing bythe Director of the using agency that those particular features are essential andspecifying the reason that similar products lacking those features would not meetminimum requirements for the item. (5 GCA § 5268(b).)

H. Purchase descriptions shall describe the salient technical requirements or desiredperformance characteristics of supplies to be procured without includingrestrictions which do not significantly affect the requirements or characteristics. (5GCA § 5268(c).)

I. BRAND NAMES: Since use of a brand name specification is restrictive, it may beused only when the purchasing officer makes a written determination that only theidentified brand name item will satisfy the territory’s needs. The governmentshould seek to identify multiple, competitive sources of brand name items. (§4103(b)(2)(c).)

1. See, L.P. Ganacias, CV 1787-00, supra, at page 22, where the Court wasobserved the agency “undertook no evaluation which lead to the conclusionthat only Motorola pagers would meet the needs of the agency”, and “therewas no written documentation prepared which would support a conclusionthat no other brand of pager would suffice”. The Court stated, “while GIAAmay have had legitimate reasons for focusing its IFB on the Motorala brandpagers, there is absolutely no documentation to support such decision....[T]his violation by Defendant GIAA is duly noted by the Court and theDefendant is placed on notice that any and all future IFB’s must comply withGuam’s procurement regulations.”


2. See, In the Appeal of IBSS [vs GPSS], supra, OPA-PA-08-011, at p 13,wherein the Public Auditor held procurement of XEROX brand copierscould not be justified under a brand name specification.

J. BRAND NAME OR EQUAL: Use of “brand name or equal” specifications (§4103(b)(2)(b))”

1. The procurement officer must make the written determination that

a. no specification for a common or general use item is available,

b. and time does not permit the preparation of another form ofspecification (not including a brand name specification)

c. and either the nature of the product or the territory's requirementsmakes use of a brand name or equal specification suitable

d. or use of the brand name or equal specification is in the territory'sbest interest.

2. The specifications must designate three or as many different brands as arepracticable as "or equal" references.

3. The specifications shall include a description of the particular design,functional or performance characteristics of the brand name product whichare required, unless such essential characteristics of the brand name productare commonly known in the trade or industry.

4. The brand name or equal specification must explain that the use of a brandname is for the purpose of describing the standard of quality, performanceand characteristics desired and is not intended to limit or restrictcompetition to the brand name product.

K. The Who and How of specification preparation and use:

1. Specifications contained in any invitation for bids or proposals “for theprocurement of supplies” shall identify the person responsible for draftingthe specifications and any persons, technical literature or manufacturer’sbrochures relied upon by the responsible person drafting thespecifications”. (5 GCA § 5267.)

2. The CPO shall prepare, issue, revise, maintain and monitor the use ofspecifications for the supplies and services required by the Territory. (5GCA § 5262(a).)

a. The CPO “should ensure that restrictive ad specifications that favor


one bidder over another are not used, and that any specificationsprovided [by the using agency] are properly screened and amendedwhen necessary to prevent such restrictive specifications fromappearing in future IFBs.” ( In the Appeal of Guam Publications,Inc., OPA-PA-08-007, p 13.)

3. The Director DPW shall prepare, issue, revise, maintain and monitor theuse of specifications for construction required by the Territory.. (5 GCA §5262(b).)

4. The duty of the CPO and Director DPW to prepare and utilizespecifications may be delegated to the Using Agencies. (2 GAR §4103(a)(1).)

5. Special circumstances for specification preparation or use:

a. Third party contracts to prepare specifications:

(1) A contract to prepare specifications for territory use inprocurement of supples or services (2 GAR § 4103(a)(2)(a))may be entered into if:

(a) there will be no substantial conflict of interestinvolved or it is otherwise in the best interest of theterritory,

(b) as certified in a written determination made by theCPO, Director DPW or Head of the Agency, and,

(c) and so long as such officer retains the authority tofinally approve the specifications.

(2) Similarly, the Director DPW can authorize third partycontracting for specification preparation for construction. (2GAR §4103(a)(2)(b).)

b. In emergencies (see Emergency method above; 2 GAR § 3113), “anynecessary specifications” may be utilized. (2 GAR § 4103(a)(2)(c).)

c. For Small Purchases (see Small Purchase method above; 2 GAR §3111), purchasing and using agencies are generally authorized toprepare specifications for such purchases (Id.).

6. Procedures for Development of Specifications, Generally (includingpreparation by the CPO, Director DPW , Heads of Agencies, third partiesand all others; 2 GAR § 4103(b)(1)):


a. Specifications may provide for alternate descriptions “where two ormore design, functional, or performance criteria will satisfactorilymeet the territory’s requirements.” (Sub§ (b))

b. “To the extent feasible, a specification shall not include anysolicitation or contract term or condition such as a requirement fortime or place of bid opening, time of delivery, payment, liquidateddamages, or qualification of bidders.” (Sub§ (c))

7. Preparation and use of specifications for Common or General Use Items (2GAR § 4103(b)(2)(a)):

a. The author is unaware of any application of this provision,notwithstanding having reviewed numerous solicitations with widelyvarying specifications for supposedly standard, commercial copiers,but considers it to be a good idea if implicated properly, so includesit here.

b. Common or General Use specifications are intended for:

(1) A supply, service, or construction item used in common byseveral using agencies or used repeatedly by only one when

(a) commercially produced or provided, and

(b) the characteristic of it is relatively stable while thefrequency or volume of procurement is significant.

(2) When the territory’s recurring needs require uniquelydesigned or specially produced items.

c. The drafter of the specification shall provide the using agency(ies)and a reasonable number of manufacturers and suppliers anopportunity to comment on the draft specification.

d. Final approval or cancellation of the specification lies only with theCPO, the Director DPW or the Head of a Purchasing or UsingAgency.

e. Revisions and clarifications of specifications for common or generaluse items requires similar review and approval.

f. The provision for common or general specifications is identified inthe regulation as “special additional procedures”, implying, if theimplication was not already clear, that all other applicable rulesregarding the policy, form and content of specifications apply. (See2 GAR § 4107 (and to similar effect 5 GCA § 5266): “The


requirements of this Chapter regarding the purposes andnonrestrictiveness of specifications shall apply to all specifications,including, but not limited to, those prepared by architects,engineers, designers, and draftsmen for public contracts.”)

XV. VARIOUS CONTRACT TYPES, AND THEIR REQUIREMENTS FOR USE

A. We have been discussing the various methods of source selection (procurementtypes) and the specifications that determine what it is the government requires froma vendor/contractor. Here we differentiate the “types” of contracts the governmentcan enter into. These types are generally differentiated by pricing (e.g., “fixedprice”, “time and materials”), quantity (“definite”, “requirements”), financing terms(“lease”, “option”), time of performance (“indeterminate”, “multi-term”) and the like.

B. Note that while there is flexibility in selecting amongst contract types, differentcontract types have conditions and limitations for their usage. Contract types canonly be used as appropriate.

C. Remember also, NO form of contract is allowed if procured improperly. First, theremust be the selection and use of an appropriate method of source selection. Thenthere must be a selection of the appropriate type of contract in the solicitation. Inmany cases, the same considerations that determine the method of source selectioninfluence also the contract type.

D. This is not a thorough review of the various contracts types or their requirements, asit would detract from the primary focus of this paper, to introduce the procurementprocess. For a more in-depth study, refer to 2 GAR § 3119, and to 2 GAR § 5102 etseq. for contract considerations for determining different methods of managementfor construction contracts.

E. Note, also, that the regulations also deal particularly with clauses within contracts,and that such clauses are mainly not discussed in this paper. (See, e.g., 2 GAR §§5106 and 6101.)

F. “Subject to the limitations of this Section, any type of contract which will promotethe best interests of the Territory may be used”. (5 GCA § 5235.)

1. A cost-plus-a-percentage-of-cost contract is prohibited. (Id.)

2. A cost-reimbursement contract requires a determination it is likely to be lesscostly than any other type. (Id.)

3. Except for a fixed-price contract, no contract type shall be used unless thereis a determination that the contractor’s accounting system permits timelyand adequate collection and allocation of cost data. (5 GCA § 5236.)


G. Policy Regarding Selection of Contract Types (2 GAR § 3119(c):

1. “The objective when selecting a contact type is to obtain the best value inneeded supplies, services, or construction in the time required and at thelowest cost or price to the territory.”

2. “The selection of an appropriate contract type depends on factors such asthe nature of supplies, services, or construction to be procured, theuncertainties which may be involved in contract performance, and theextent to which [either] the territory or the contractor is to assume the risk ofthe cost of performance of the contract.”

H. Multi-term contracts: A contract may be entered into for any period of time“deemed to be in the best interests of the Territory” (5 GCA § 5237) provided:

1. the term of the contract and any conditions of renewal or extension areincluded in the solicitation

2. funds are available for the first fiscal period at the time of contracting

a. continuance of payment and performance obligations for succeedingfiscal periods are subject to further availability and appropriation offunds

(1) if funds are not available, the contract is to be cancelled andthe contractor reimbursed only for the reasonable value ofany non-recurring costs incurred but not amortized in theoriginal contract price for the goods delivered

b. a determination is made that the Territory’s estimated requirementswill be reasonably firm and continuing

c. the contract will “serve the best interests of the Territory byencouraging effective competition or otherwise promotingeconomies”

3. The objective of the multi-term contract is to promote economy andefficiency in procurement by obtaining the benefits of sustained volumeproductions and consequent low prices, and by increasing competitiveparticipation in procurement intended for multi-term contracting. (2 GAR §3121(b).)

a. The MPC makes it clear that this form of contract is particularlyintended where the need is to attract offers from large companieswhose capacities for production limit them to large production runs,so that the government can procure larger quantities and obtain thebenefits of volume discounts. Commentary No. 1 to MPC § 3-503


adds, “Multi-year procurements should attract more competitors tosubmit bids or offers for the larger contract awards and therebyprovide the jurisdiction with the benefits of increased competition.”

4. Multi-term contracts, more specifically (2 GAR § 3121(a)):

a. Are appropriate (and limited: sub§ 3121(c))

(1) to obtain uninterrupted services extending over more thanone fiscal period

(a) where the performance of such services involveshigh start-up costs, or

(b) where a changeover of service contractors involveshigh phase-in/phase-out costs during a transitionperiod.

b. Are subject to very specific conditions of use and procedure toocomplex (and rare for Guam) to mention here; see sub§§ 3121(d)and (e).

c. Are not applicable to any other contract type, including but notlimited to contracts for construction or leases (of all property, realand otherwise). (Sub§ 3121(c).)

I. Fixed-Price (2 GAR § 3119(d).) A fixed-price contract places responsibility on thecontractor for the delivery of the product or the complete performance of theservices or construction in accordance with the contract terms at a price that may befirm or may be subject to contractually specified adjustments. The fixed-price isappropriate for use when the extent and type of work necessary to meet territorialrequirements can be reasonably specified and the cost can be reasonably estimated.

a. A fixed-price type of contract is the only type of contract that can beused in competitive sealed bidding. (Sub§ 3119(d)(1).))

b. When, under a contractually specified adjustment, the contractpermits unilateral action by the contractor to bring about thecondition under which a price increase may occur, the contract shallreserve to the territory the right to reject the price increase andterminate the contract, without liability as to any future performance. (Sub§ 3119(d)(3)(B).)

J. Indefinite Quantity (2 GAR § 3119(i)(2): A contract for an indefinite amount ofsupplies or services to be furnished.

a. Generally, an approximate quantity is stated in the solicitation. It


may specify a minimum or maximum amount.

(1) “[O]ne of the primary purposes of the procurement code is tomaximize to the fullest extent practicable the purchasingvalue of public funds.. 5 G.C.A. §5001(b)(5). Here, GSAcould improve the purchasing value for these ads byspecifying at least a minium.... Further, future procurementsfor these ads will benefit by not using an indefinite quantify[sic; “quantity”] contract....” (Guam Publications, supra, (at p12).)

b. Requires a determination “indicating the rationale for using this typeof contract and the reasons why another contract form will notsuffice.”

c. Must be reviewed every 6 months for a determination of thecontinued need for such a contract.

d. To preserve competition, they shall not be used more than twice perfiscal year for the same supplies or services.

e. If continued use of the supplies or services is required, theprocurement must be conducted by competitive sealed bid or underthe authority of the small purchase method..

K. Requirements contracts (2 GAR § 3119(i)(3): This is a variant of indefinite quantitycontract for supplies or services that obligates the territory to order all actualrequirements during a specified period of time from a particular contractor. (See“multiple awards” below when there is more than one such contractor.) There arespecial considerations, in addition to the general considerations for indefinitequantity contracts, that must be taken into account for requirements contracts, andvariations on that theme, such as “outputs” contracts and “exclusive dealings”.

L. Leases must be in the best interests of the territory and “not used to circumventnormal procurement procedures.” (2 GAR § 3119(j)

a. Note that a lease containing an option to purchase must be let bycompetitive sealed bid or sole source in order for the option to bevalid. (2 GAR § 3119(k)(3).)

M. Options to purchase, renew, extend (2 GAR § 3119(k):

a. Options must only be for the benefit of the territory, not thecontractor.

b. Options must be specified in the original solicitation.


c. Before any option to renew, extend or purchase is exercised(including an option in a lease):

(1) the Procurement Officer should ascertain whether acompetitive procurement is practical and more advantageousto the territory.

(2) A written record of the findings and determination must bemade part of the contract file.

N. Multiple Source Contracts (2 GAR § 3122). This involves splitting up contractrequirements amongst multiple contractors. The do not technically “share”contracts as each one is independent. These are not generally favored since itcreates the environment for collusion to occur. There are two varieties allowed:

1. An Incremental Award is a variety of Definite Quantity Contract (sub§3122(a)):

a. An incremental award is the award of portions of a DefiniteQuantity contract to more than one contractor; each portion ofwhich is for a definite quantity, all totaling 100% of thegovernment’s requirements.

b. Can be justified only when necessary to obtain the total quantity thegovernment needs, such as when no single contractor has sufficientcapacity to meet the needs.

c. Intent to award incrementally must be stated in the solicitation alongwith the criteria for how the definite quantities will be divvied up.

2. A Multiple Award is a variety of Indefinite Quantity Contract (sub§3122(b)):

a. A multiple award is an Indefinite Quantity contract, moreparticularly, a Requirements contract. The government becomesobligated to buy all of its requirements from the awarded multiplecontractors.

b. Multiple awards must be procured either by the competitive sealedbid method, the small purchase method or emergency procurementmethod of source selection.

c. To avoid the facilitation of collusion, multiple awards cannot bemade when a single award can be made to meet the territory’s needswithout sacrificing economy or service, nor for dividing business orsettling low tie bids.


d. Multiple awards must be allocated to the least number of contractorscapable of meeting all government requirements.

O. Construction contracts

1. The various methods of management for construction and the corresponding types of construction contracts are too numerous and too technical for thescope of this paper. Suffice to say that there are different considerations tobe made in choosing between them, according to circumstances anddesired outcomes. See, generally, 2 GAR §§ 5102 and 5106.

XVI. PROCUREMENT PROTESTS

A. The first key take-away here is that, if you are entitled to protest the solicitation oraward, you MUST FIRST protest to the agency BEFORE you take your complaint tothe Public Auditor or to court. (See, Order of Dismissal, In the Appeal of MegaUnited Corp., OPA-PA-09-001.) This is part of the notion of exhaustion ofadministrative remedies.

1. A person who has a complaint about a solicitation or award “ should seekresolution of their complaints initially with the Procurement Officer or theoffice that issued the solicitation.” (2 GAR § 9101(b).)

B. ONLY “AGGRIEVED” BIDDERS CAN PROTEST: Any actual or prospective bidder,offeror, or contractor who may be aggrieved in connection with the method ofsource selection, solicitation or award of a contract, may protest to the CPO, theDirector DPW or the Head of a Purchasing Agency, whoever it was that handledthe solicitation. (5 GCA § 5425(a).)

1. This is intended to give rights only to persons “who may be aggrieved”. Simply losing a bid fair and square does not entitle you to protest. You areaggrieved if there was something particularly improper or irregular in thesolicitation, or at least you have reasonable grounds to believe it..

2. GovGuam, when rendering a Protest Decision, can impose costs (but notattorneys fees) on any protester who files a protest “fraudulently, frivolouslyor solely to disrupt the procurement process “. (2 GAR § 9101(g)(2).)

a. Costs were applied for but rejected by the Public Auditor in In theAppeal of Guam Publications, Inc., OPA-PA-08-007 (beginning at p17.). The Public Auditor noted that a bidder’s right to seekclarification and further inquiry regarding an IFB, and the right toprotest, absent any other evidence of wrongdoing, do not “disruptthe procurement process.”


C. “Protestors may file a protest on any phase of solicitation or award including, butnot limited to, specifications preparation, bid solicitation, award, or disclosure ofinformation marked confidential in the bid or offer.” (2 GAR § 9103(c)(2).) Incorrect use or execution of a method of source selection is a ground for protest. (5 GCA § 5425(a).)

D. TIMING FOR PROTEST FILING:

1. General Rule: 14 days from knowledge of aggrievement. The protest shallbe submitted in writing to the Head of the Purchasing Agency withinfourteen (14) days “after such aggrieved person knows or should know thefacts giving rise thereto.”

2. If your protest is not filed within the time required, you cannot appeal tothe Public Auditor. (In the Appeal of IBSS [vs GPSS(2)], cited above, OPA-PA-08-011, p 6: “The threshold issue in this matter is whether IBSS’December 4, 2007, protest was timely.”)

3. That IBSS case is one example of the protest condition that the protestantmust “know or should know of the facts giving rise” to being aggrieved. Inthat case, IBSS knew for at least 2 years that GPSS was purchasing copiersfrom a competitor, but it alleged that it did not know, and GPSS would notdisclose despite request, whether there was any legal basis for the purchase,despite suspicions it was improper. The Public Auditor held that IBSS didnot know, and could not know, it was aggrieved until it was finally given theprocurement file, which revealed the purchases were not conducted inaccordance with the law and regulation. IBSS had filed its protest within thetime limits of revelation of those facts, so the appeal was upheld.

a. Where a protesting offeror had, at an earlier date, received notice ofintent to award the contract to another offeror, but did not protestuntil later when information was revealed in a governmentmemorandum which suggested the protester may be aggrieved, theGuam Supreme Court held the protesting offeror “did not know, norshould it have known, of the facts giving rise to this protest until itreceived” the memorandum, thus the protest was timely filed basedon that revelation, and was not time barred because of the earliernotice of intent to award to another. (Guam Imaging Consultants,Inc. V. GMHA, 2004 Guam 15, at ¶ 33.)

b. See discussion of In the Appeal of Latte Treatment Center, Inc.,OPA-PA-08-008, and Appeal of Island Business Systems & Supplies(CNMI OPA case), both discussed below, regarding whether merenotice of award to another is sufficient to trigger the 14 day protestfiling deadline.

4. POSSIBLE EXCEPTION FOR PRE-BID-OPENING ISSUES: The second key


take-away is that if you have a complaint about the method of sourceselection or its implementation or the form or substance or anything elseconnected with the form or conduct of the solicitation occurring orrevealed up to the time set for submission of bids or proposals (whichincludes issues regarding specifications), you should, if at all possible,protest BEFORE the time set for opening the bids.

a. IF you cannot submit the protest before bid opening, you probablyshould not submit a bid or proposal if you want to pursue yourprotest.

b. It is hard to pinpoint the law on this, and there is as yet no definitiveGuam court or OPA decision known to the author, but it isconsidered to be taking unfair advantage of the procurement processif you have a complaint about the conduct of the bid but do not sayanything about it until you see what the other bids are or if you gotthe award anyway.

(1) See Appellant’s arguments in Application for Enforcement ofStay of Solicitation, In the Appeal of IBSS, OPA-PA-08-012,footnote 9,http://www.guamopa.org/docs/procurement_appeals/Application_for_Enforcement_of_Stay_of_Solicitation_08_012.pdf .

(2) In L.P. Ganacias Enterprises, supra, a Superior Court case,the Judge found many improper irregularities in the bidprocess but ruled he was unable to offer the Plaintiff anyrelief because the Plaintiff bid on the IFB. The Judge found(at page 19) the Plaintiff “did not claim that the bid processwas improper from the outset.... Had Plaintiff believed thatthe actual Invitation itself was improper or illegal, thePlaintiff should have sought to enjoin the bid process. Instead, the Plaintiff submitted bids pursuant to the Invitationfor Bid, and thus the Court finds that the Plaintiff cannot nowclaim as a basis for relief, the fact that the Invitation For Bidwas contrary to law.” It must be noted, however, that thiswas not a case brought under the review processes of theProcurement Act, but as a civil action seeking a preliminaryinjunction, which had to be judged by those deferential andunique standards and procedures applicable to such aremedy, not the administrative standards and procedures ofbid protests under the Procurement Act (see, L.P. Ganancias,at page 5 et seq.).

c. Neither the Model Procurement nor Guam law expressly supportthis possible exception. In contrast, Federal procurementregulations do. (FAR § 33.103(b)(2).) Thus, referring to FAR’s “very

http://www.guamopa.org/docs/procurement_appeals/Application_for_Enforcement_of_Stay_of_Solicitation_08_012.pdf

http://www.guamopa.org/docs/procurement_appeals/Application_for_Enforcement_of_Stay_of_Solicitation_08_012.pdf


formal rules”, Cibinic and Nash say, “[p]rotests based on allegedimproprieties in a solicitation that are apparent prior to bid openingor the closing date for receipt of proposals must be filed prior to bidopening or the closing date for receipt of proposals. In all othercases, protest must be filed not later than 10 days [the FARrequirement] after the basis of the protest is known or should havebeen known, whichever is earlier.” (At p 1485-86.) Cibinic andNash also note that Federal agencies have some leeway forconsidering protest filed after the 10 [14] day filing limit. (P 1486.)

d. So, if you have the case and have not been able to file a protestbefore bid opening, you should be encouraged to proceed with aprotest, even if you have submitted a bid but especially if you havenot, so long as you have met the 14 day limit. Still, if you can avoidthe issue, do so.

5. You can protest issues revealed at or after bid opening, including rejectionof bids or proposals, matters of responsiveness and responsibility, and thelike, after the bid opening, within the 14 day general rule.

E. The third key take-away is that if you miss a deadline to file a protest (or appeal),absent extreme and unjust circumstances, you will have a snowball’s chance onGuam of ever getting it heard.

F. Request for Reasons for Rejection of Bid:

1. Generally, unselected bidders/offerors are given no reason for rejection ornon-selection in the notice of award.

a. “Written notice of award shall be sent to the successful bidder. Inprocurement over $25,000, each unsuccessful bidder shall benotified of the award.” (2 GAR § 3109(q), applicable onlyspecifically to IFBs.)

b. A record showing the basis for determining the successful bidderunder an IFB must be made part of the procurement file, which is apublic record, but that basis does not need to be disclosed in thenotice of award. (See, 2 GAR § 3109(p).)

(1) In L.P. Ganacias, CV 1787-00, supra, the Judge took pains topoint out several deficiencies in the bid process in that case,“in an effort to ensure that such do no [sic: “not”] occur infuture....” (At page 20.) Among the deficiencies in that casewas the failure of the agency to document the “writtendetermination demonstrating the basis upon which thedecision was made to award the bid.” (At page 24.)


c. A similar requirement for a record (but no notice) justifying theselection of the “best qualified” offeror must also be made for RFPs(2 GAR § 3114(m)) and for justifying a finding of “unacceptability” inthe first phase of multi-step sealed bids (2 GAR § 3109(t)(4)(c).

2. However, 2 GAR § 3115(e)(4) provides a specific authority for any rejectedbidder or offeror to request reasons why the bid was rejected: “[u]ponrequest, unsuccessful bidders or offerors shall be advised of the reasonstherefor.”

3. 2 GAR § 3115(e)(3) sets out, broadly, the legal bases for rejecting a bid or aproposal/offer.

4. The three legal bases specifically (but not exclusively) allowed to reject abid are:

a. The business that submitted the bid is nonresponsible.

(1) And here there is a transcription error in the ProcurementRegulations, which, though specifically referring to“Determination of Nonresponsibility”, incorrectly uses theword “nonresponsive”. Note that the corresponding MPCprovision says “nonresponsible” (MPR R3-301.03(a)(i).)

b. This bid is not responsive. Or,

c. The supply, serve or construction item does not meet thespecifications or other acceptability criteria.

5. The three legal bases specifically (but not exclusively) allowed to reject aproposal (offer) are:

a. The business that submitted the proposal is nonresponsible (andhere the Guam law got the word transcribed correctly).

b. The proposal ultimately (after any opportunity has passed to alter orclarify) fails to meet the announced requirements in some materialrespect (i.e., was nonresponsive). Or,

c. The proposed price is clearly unreasonable.

d. See In the Appeal of Latte Treatment Center, Inc., supra, whichmade the close observation that an offeror under an RFP who is notselected for award was “not rejected; rather LTC’s proposal was notselected.” That is an interesting distinction, but is it one with adifference? Sub§ 3115(e)(4)(B) specifically says “[r]easons forrejecting proposals” include the ones noted above.


6. Although sub§ (e)(3) calls these “reasons” and not “legal bases”, the authoris of the view that sub§(e)(4), which allows parties to request and be“advised of the reasons” for rejection, requires some advisement of the factsupon which the rejection is based, particularly when the party requestinghad an apparent good shot at the award, and especially since thegovernment is supposed to make a record of that.

7. The regulations speak of no time limit within which to lodge your Requestfor Reasons.

8. The statement is often heard that an agency need only provide minimaljustification in its notice of award rejecting other bidders, and that isconsistent with the requirement regarding mere notice of the award. However, the author would argue that this specific provision allowing arejected bidder to request reasons necessarily implies an obligation toprovide more substantive detail for the rejection, when requested. Such arule would be consistent with the polices to provide increased publicconfidence, ensure fair and equitable treatment of all persons who deal withthe procurement system, to provide safeguards, and to require public accessto all aspects of procurement. It would also further the goal of exhaustion ofadministrative remedies by disclosing facts at the agency level upon which aprotest can be substantively heard, so as to alleviate the burden on theappeals process.

9. A Request for Reasons would not usually constitute a Bid Protest, since ifyou know the facts by reason of which you may be aggrieved, you shouldprotest. When in doubt as to whether you are or should be protesting,submit your Protest within the 14 day protest filing period even if you havea pending Request for Reasons. You can always withdraw a protest filed ingood faith, but cannot belatedly file a protest when you knew or shouldhave known of the facts, and are merely using the Request for Reasons to tryto get the government to acknowledge its error.

10. Even if your Request for Reasons does not claim expressly to be a “protest”,the government may respond to your request as though it were a “protest”. A good indication the agency believes your Request is a Protest is if, in theirresponse, they notify you that you have “a right to administrative andjudicial review”. You should carefully review the response for just such adetermination, because your protest filing period starts from the decision ona protest. That is why it is good practice to specifically state in your Requestthat it is not meant to be a Protest.

G. FORMAT OF PROTEST

1. First, distinguish between a complaint and a protest. You can “complain”about a grievance to the CPO or the officer who issued the solicitation


verbally, but a “protest” is more formal and must be in writing. (2 GAR §§9101(b) and (c).)

2. The precise form of the bid protest is not defined and can be in a simpleletter format, but must be in writing, should positively declare it is a“protest”, and include, at a minimum (2 GAR § 9101(c)(3).):

a. name and address of the protestor;

b. appropriate identification of the procurement, and, if a contract hasbeen awarded, its number;

c. a statement of reasons for the protest; and

d. supporting exhibits, evidence, or documents to substantiate anyclaims unless not available within the filing time in which case theexpected availability date shall be indicated.

e. To expedite handling of protests, the envelope “should” be labeled“Protest.” Technically, the protest “shall” be delivered in duplicate.

3. Bear in mind that you must protest every issue you know about (or shouldknow about) because you cannot add additional issues later (unless, ofcourse, you do not discover the facts upon which the additional protest isbased until later, in which case you should bring a separate protest on thosematters). (See arguments rejected in In the Appeal of Guam Publications,Inc., OPA-PA-08-007 (at III, A, beginning p 6.)

4. You are encouraged to review the various Procurement Appeals filespublished on the Public Auditor’s website, noted above. Click on the“Documents Filed” link in each appeal case and a drop-down menu of fileddocuments is presented. Most protest letters are attached to the “Notice ofAppeal”, and are also supposed to be included in the “Agency Report”,though the full contents of all Agency Reports are not always online (theyare available for review in the Public Auditor’s office).

H. RESOLUTION OF THE BID PROTEST

1. Bid protests are intended to be settled, where possible, by “mutualagreement”, which implies an informal dialogue. (5 GCA § 5425(c).) Information required by either party from the other should be renderedexpeditiously (2 GAR § 9103(d).).

2. In the author’s experience, it is rare for there to be any procedure other thana written response; and, often, not even that. In the cases where theGovernment has instigated a discussion to resolve the protest, issues havebeen narrowed or avoided altogether.

This Ap peal and Decision brings to mind another incident reported by Carlos Madrid’s2

Beyond Distances, p 199: ”the repatriation of the deportees served to call the attention of the centralgovernment in Madrid to the administration of Tinian, which had been leased under very obscure termsunder Governor Moscoso. Having made continual requests for information and transmittal of the originaldocuments, Madrid finally found it necessary to issue a Royal Decree, signed June 15, 1877 to have thedocuments sent to Spain. Once this was done, the conclusions were clear: ‘The leasing of Tinian wasmade without the knowledge of the government’. The private lease of the island ‘is anomalous and ill-founded in the legal prescriptions ...’.”


3. Any “interested party” is entitled to receive from the Agency any informationbearing on the protest, unless proprietary or otherwise confidential. For thispurpose, it appears an “interested party” is more restricted than usuallythought, including only persons aggrieved who’ve filed a protest (2 GAR §9101(a)(1)(a)).

4. Bid protests decisions are meant to be rendered in writing “as expeditiouslyas possible” (2 GAR § 9101(g)(1)) and “promptly” (5 GCA § 5425(c)).

a. The Public Auditor has determined, in In the Appeal of [IBSS], OPA-PA-08-003, that she has the power to compel an Agency to issue adecision on a protest when the agency fails to act to render one,under her authority to promote the integrity of the procurementprocess (5 GCA § 5703). In that case, the protester also filed aRequest for Decision with the Agency after the Agency failed torender a decision promptly or expeditiously, and that Request wasalso ignored. The Public Auditor found, in the circumstances of thatcase, that the failure of the Agency to render a decision on theprotest was an act of bad faith which denied the protestors dueprocess rights.2

5. The three formal requirements of a decision are (5 GCA § 5425(c)):

(1) It must be in writing, and

(2) It must state the reason for the action taken, and

(3) It must inform the protestant of its right to administrative andjudicial review.

6. The protester may be entitled to “the reasonable costs incurred inconnection with the solicitation and protest, including bid preparation costs,excluding attorneys fees, when a protest is sustained and the protestingbidder or offeror should have been, but was not awarded the contract underthe solicitation.” (2 GAR § 9101(g)(2).)


I. Requests for Reconsideration of Protest Decision

1. 2 GAR § 9101(h) allows a protester or any agency or interested party whosubmitted commits during the protest to request that an Agency reconsiderits initial decision. This request must be made within 15 days after receiptby the protester of the decision.

2. This is a potential trap for the unwary because of an inconsistency betweenthis regulation and the law: law does not take that 15 day time period forreconsideration into consideration when determining the time limitsrequired for filing an Appeal.

a. In TRC Environmental Corporation SP 160-07, the protesterfollowed up with further correspondence which, on writ to theSuperior Court, it tried to argue was a request for reconsideration. The Court held it was not such a request, because, among otherthings, it was not labeled as such, but instead was labeled a “Letterof Protest”. The Court suggests (at page 6), had it been properlyframed as a request for reconsideration, it might have tolled the 15day filing period (“it was not a request for reconsideration and thusno tolling occurred”).

XVII. THE AUTOMATIC STAY

A. Once a protest is filed, the government can take no further action on the solicitationor award of contract (unless the stay is lifted as mentioned below). This is called the“automatic stay”, and is essentially an injunction.

1. “In the event of a timely protest ... the Territory shall not proceed furtherwith the solicitation or with the award of the contract prior to finalresolution of such protest ....” (5 GCA § 5425(g).)

a. Note that the stay only covers solicitation and award. It does notapply to stay performance of a contract that has already beenentered into.

2. “Final resolution” would include awaiting the outcome of an Appeal afterthe protest. (See, In the Appeal of [IBSS], OPA-PA-08-012, at pp 9-10.)

a. But this would not prevent the Government from proceeding toaward a contract between the time of its decision on the protest andthe filing of an Appeal. (See, In the Appeal of Guam Publications,Inc., OPA-PA-08-007, at p 18.) Such action would bear on theultimate remedy available to an Appellant (see below).


b. In L.P. Ganacias, CV 1787-00, supra, (at page 25) the Judge found“most troubling” the fact that the agency awarded a contract prior toreceipt by the other bidders of the notice of award, which precludedthe possibility of protesting, and thereby staying, the award. TheJudge stated, “[c]ertainly a party cannot protest a bid award unless oruntil that party has been informed that the contract was awarded toanother bidder. For an agency to attempt to circumvent this processby first awarding the contract, and then later informing the otherbidders that their respective bids were rejected is highly improper. The parties should be informed in writing that their respective bidswere rejected and the basis for such rejection.... The agency shouldthen proceed to award the contract.”

B. Any further action to proceed with a solicitation or award during the period of theautomatic stay is void UNLESS all of the following approvals are given (5 GCA §5425(g) :

1. The CPO or Director DPW “after consultation with and written concurrenceof the head of the using or purchasing agency and the Attorney General ordesignated Deputy Attorney General, makes a written determination that theaward of the contract without delay is necessary to protect the substantialinterests of the Territory”;

a. But note: “the Public Auditor shall review and confirm or reject anydetermination by the Chief Procurement Officer or the Director ofPublic Works that award of a contract without delay pending Appealis necessary to protect the interests of the government.” (2 GAR §12501(b).) It is unclear whether this express directive is intended tobe self-enforcing or only applicable in the event of a timely protestof the decision to lift the stay, as next mentioned.

2. And, absent a declaration of emergency by the Governor, the protestant hasbeen given at least 2 days prior notice (to allow a protest on thedetermination to the Public Auditor; see step # 3(b) below);

3. And, either:

a. If the protest is pending on Appeal to the Public Auditor or Court,the Public Auditor or Court has confirmed such determination; OR

b. If no protest Appeal is pending, no protest to the Public Auditor overthe determination made in step # 1 above is filed prior to theexpiration of the 2 day notice mentioned in step # 2 above.

C. The general provisions of Guam Procurement Law regarding the automatic stay – and by extension, anything else – override any inconsistent provisions of anAgency’s own regulations. (Guam Imaging Consultants, Inc., v. Guam Memorial


Hospital Authority, Guam Supreme Court, 2004 Guam 15 at ¶¶ 24, 41.)

XVIII. APPEALS OF BID PROTESTS TO THE PUBLIC AUDITOR

A. Prerequisites of Appeal are Protest and Decision: A decision by an Agency “maybe appealed by the protestant, to the Public Auditor within fifteen (15) days afterreceipt by the protestant of the notice of decision”. (5 GCA § 5425(e).) Thus, tofile an Appeal there must be:

1. First, a protest to the Agency (see, Request for Dismissal of Appeal, In theAppeal of [IBSS], OPA-PA-06-004, based on IBSS’ failure to protest, and Inthe Appeal of Mega United, supra), and

2. Second, a decision on the protest (see, In the Appeal of [IBSS vs GPSS(1)],OPA-PA-08-003, discussed above as to the Public Auditor’s power tocompel a decision).

a. In Teal Pacific (09-002) the Appellant argued that the protestdecision was improper because it failed to specifically notifyAppellant of its right to appeal. That issue was not decided.

b. Note the case mentioned above, Appeal of Midtown Stationery &Office Supply Co., No. 1461, (Maryland State Board of ContractAppeals - “MSBCA”) June 26, 1990, which held that a procurementofficer’s response to a mere inquiry did not constitute a decision, sothe review board lacked jurisdiction to hear an appeal based on thatresponse.

c. By the same reasoning, a request for reasons for rejection of the bid,mentioned above, would not necessarily constitute a “protest”, thuswould not normally serve as the basis for an Appeal.

(1) See, “Notice of Appeal” in In the Appeal of J&GConstruction, OPA-PA-007-05, where question ofjurisdiction to Appeal from a response to a Request forReasons (that also specifically reserved a right to protest) wasnoted by Appellant but was not considered an issue onAppeal.

B. 15 Day Filing Deadline: The Appeal must be filed within 15 days of receipt of thedecision on the protest. The filing deadlines for Appeals (and protests) tend to bestrictly enforced. (The appeals board lacks authority to waive a late filing evenwhere no party would be prejudiced by the waiver: Appeal of Acme Market #6762and #6845, No. 1763, (MSBCA) Dec. 23, 1993. See, TRC Environmental


Corporation SP 160-07, at page 5.)

1. Equitable Tolling: Although strictly enforced generally, statutes of limitationsare subject to the notion of equitable tolling, which allows the filing periodto be effectively extended in a particular case if a filing party was diligentbut untimely due to unjust or other equitable considerations. See, TRCEnvironmental Corporation SP 160-07, at page 6: “Limitations periods canbe tolled on an equitable basis, especially if the government has engaged intrickery”.

a. The Public Auditor has indicated an inclination to stretch the timelimit to file (equitably toll) an Appeal if the Agency has clearlymisled the Appellant about the nature or existence of a possiblegrievance. (See, In the Appeal of [IBSS vs GPSS(2)], OPA-PA-08-011, at p 9 and following.)

b. In the Teal Pacific appeal (09-002), the Appellant has argued that anagency response to protest which does not include a notice of rightto review, tolls the filing period because such a failure is a denial ofdue process. The Appellant claims it received notice of the decisionon April 7 and filed its appeal April 28 , 21 days later. It may beth th

noted the Appellant and its attorney had previously brought a protestappeal (Teal Pacific (08-010), which was, as this case ultimately was,dismissed due to the recusal of the Public Auditor), thus could notbe characterized as unacquainted with procurement processes. TheAppellant relied on two Guam Superior Court cases to support itsclaim.

(1) In the first, Pacific Security Alarm (Pacific Security Alarm,Inc. v DPW, Guam Superior Court CV 0591 - 05), the noticeinforming Appellant its protest was denied added “you havethe right to seek administrative and judicial review”. Appellant petitioned the court for review 17 days afterreceipt of the decision (but, because of the weekend,effectively only one day late). The agency responded to thepetition, motions were allowed and then cut off, and the casewas set for trial. The agency only raised the filing deadlineissue a year later, one week before trial. The Court reviewedGuam Supreme Court cases and held that filing deadlinesgenerally (and particularly in the case of protest appeals) arelimitations issues and not jurisdictional, and they are subjectto equitable tolling. The Court held, since there was at thattime no avenue for administrative review, and the noticefailed to advise the appropriate action to take for judicialreview, that the filing deadline in that case was equitablytolled until the petition was actually filed. The Court heldthat the statute of limitations is an affirmative defense and the


failure to promptly raise the issue until just before trial was“prejudicial” to the petitioner. The Court observed it wasmisleading to notify the protestor that it had a right toadministrative review, given there was no administrativereview then possible . Those issues are no longerproblematic, given the full possibility of review to OPA. Theauthor believes this case was decided on broad equitabletolling notions and the specific facts of this case, and that itdid not establish any bright line, ipso facto, due process rule.

(2) In the second case, Sumitomo Construction (citation inNotice of Appeal), the Court ruled that, substantively, thepetition for writ of mandate would fail. Therefore, in theauthor’s view, the court’s additional finding of a need tonotify a protester of its right of review was uncontrollingdicta and not strongly supportive of the Appellant’sargument.

2. Recall the trap for the unwary presented by the Request for Reconsideration. Hint: If the original protest decision (or even if the answer to a request forreasons) contains a statement informing “the protestant of its right toadministrative and judicial review” (see 5 GCA § 5425(c)(2)), the protestermust not dilly-dally around with any request for reconsideration, otherwisethe time for filing any appeal is jeopardized. While the equities would favorallowing time for the reconsideration process to take its course, the lawfairly clearly indicates the Appeals process is triggered by the initialdecision, and the author is aware of no case which holds otherwise. Takeaway: when in reasonable doubt, file an appeal to preserve your rights.

3. Recall that a rejected bidder can request the Agency to provide reasons forits bid rejection (2 GAR § 3115(e). In this case, assuming the bidder had noreason to know it may be aggrieved, the 15 day period to appeal would notbegin to run until the reasons were disclosed, assuming the reasons givenform the basis of a grievance.

4. The takeaway here is, if you have or suspect you have a grievance but areengaged in discussions with the government about it, file the Appealanyway within the 15 days to preserve your claim.

C. Jurisdiction of the Public Auditor

1. The time limit for filing an Appeal is strictly enforced but not jurisdictionaland is subject to equitable tolling. (See, Pacific Security Alarm, Inc. vDPW, supra.)

2. The Public Auditor has the power to review and determine “any matterproperly submitted” in connection with the protest or solicitation. (5 GCA


§ 5703.)

a. See, In the Appeal of [IBSS vs GPSS(1)], OPA-PA-08-003, where thePublic Auditor ruled she lacked jurisdiction over an appeal toconsider the merits of the protest where there was no agencydecision, but nevertheless took jurisdiction over the appeal tocompel an agency to render a decision on a protest.

b. Jurisdiction does not extend to disputes having to do with moneyowed to or by the government of Guam. Those must be broughtunder the Guam Claims Act. A full review of the GovernmentClaims Act is beyond the scope of this paper. See generally, 5 GCA§ 6101, et seq.

3. “The Public Auditor’s jurisdiction shall be utilized to promote the integrityof the procurement process and the purposes of [the Guam ProcurementAct]”. (Id.)

a. The Public Auditor has used this jurisdiction frequently to achieveresults where specific authority has not been specifically provided inthe law or regulations. See, e.g., In the Appeal of O&M Energy,S.A., OPA-PA-08-004 (where she carefully scrutinized an agencydetermination of materiality when there were extravagant differencesbetween the price of the bids).

(1) It is interesting to observe that the O&M Appeal was one ofthe few instances where the Public Auditor’s Decision wentbeyond (if only slightly) the Findings of the Hearing Officer,indicating her experience as auditor can add a very helpfulinsight to the strictly legal approach of lawyers and courts. The author believes giving the Public Auditor reviewauthority over bid protests was a stroke of legislative geniusthat has brought about a significant improvement in forging aworkable and effective GovGuam procurement process.

b. It should be carefully noted that the jurisdiction to promote “thepurposes” of the Procurement Act gives weight and substance to thepolicies and purposes expressed in the Procurement Act, some ofwhich were discussed near the beginning of this paper.

c. The Public Auditor’s power to review agency protest action is “denovo”. From a practitioner’s or vendor’s viewpoint, this is de-lovelyand delicious because it provides a complete contrast to how Courtsreview such actions.

(1) De novo review is contrasted with deferential review. Under a de novo review, the reviewer steps into the shoes of


the original decision maker and comes to an originaldecision. Under a deferential review standard, the originaldecision must be accepted unless it is clearly illegal,erroneous, capricious or arbitrary. See, L.P. Ganancias, CV1787-00, supra, at page 11 et seq.

(2) When Courts review an agency determination, they use thedeferential standard of review. An excellent summation ofthis standard of review is found in “GMHA’s SupplementalResponse to Appellant’s Comments to Agency Report” in theAppeal of J&G Construction, OPA-PA-07-005 ; seehttp://www.guamopa.org/docs/procurement_appeals/GMHAs_Supplemental_Response_to_Appellants_Comments_to_Agency_Report_07_005.pdf .

(a) It has been said that a reviewing court will notsubstitute its decision for an agency decision even if,in the court’s view, the agency decision is” wrong oreven dead wrong”, so long as it is not illegal.

(3) The Public Auditor’s de novo review has even greatersignificance when there is an appeal to a Court from the finalDecision of the Public Auditor, because, in that case, it is thePublic Auditor’s decision and findings of fact that must beaccorded deferential treatment by the Court:

(a) “Any determination of an issue or a finding of fact bythe Public Auditor shall be final and conclusiveunless found by a court to be arbitrary, capricious,fraudulent, clearly erroneous, or contrary to law. Any decision of the Public Auditor, including anydetermination regarding the application orinterpretation of the procurement law or regulations,shall be entitled to great weight and the benefit ofreasonable doubt, although it shall not be conclusive....” (5 GCA § 5704.)

d. The author takes the view that the Public Auditor must beconsidered to be a functional part of the Executive Branch ofgovernment, not subject to the control of the Governor, in the sameway that the Attorney General is a functional part of the ExecutiveBranch, and notwithstanding legislative language at face valuesetting OPA apart as an equal and independent branch ofgovernment: “There is an instrumentality of the government ofGuam, independent of the executive, legislative and judicialbranches, known as the Office of the Public Auditor.” (1 GCA §1900.)

http://www.guamopa.org/docs/procurement_appeals/GMHAs_Supplemental_Response_to_Appellants_Comments_to_Agency_Report_07_005.pdf




(1) “The government of Guam shall consist of three branches,executive, legislative and judicial....” (Organic Act of Guam,48 USC 1421a.)

(2) Thus, the duty of the Public Auditor to use her jurisdiction topromote the integrity of the procurement process and thepurposes of [the Guam Procurement Act] represents the lastline of Executive Will to get its procurement right.

(3) That is why the author believes, in contrast to the courtswhich are hesitant to interfere with executive discretion (see,J&B Modern Tech, supra, p 4), the Public Auditor is allowed,indeed directed, to take a more assertive role in inserting heroversight of executive procurement matters.

4. OPA jurisdiction extends to hearing appeals from decisions to suspend ordebar a contractor. (5 GCA §§ 5426(e), 5705 [note the reference error in §5426(e), which mistakenly points to § 5706].)

5. OPA jurisdiction does NOT include direct review of Ethical violations.

a. Complaints of ethics violations by Government employees arehandled by the Civil Service Commission. (5 GCA §§ 5675, 5676.)

b. Complaints of ethics violations by non-Government persons areintended to be handled by the Policy Office (5 GCA § 5675), whichisn’t empaneled, and governed by its regulations (5 GCA § 5676(a)),which seem not to exist in substance (see, 2 GAR §§ 11112, 11114.)

c. The Public Auditor cannot adjudicate ethical violations and will onlyconsider complaints of ethical violations (by government and,perhaps, non-government parties) when raised in connection withan appeal from a protest of a particular solicitation or award. (In theAppeal of Latte Treatment Centers, OPA-PA-08-008.) Not seeingany such connection to the appealed solicitation in that case, andwhile noting that payment of a government employee’saccommodation in a matter unconnected to the particularsolicitation on appeal was “not proper and has created theappearance of impropriety”, the Public Auditor ‘found’ there was nobreach of ethical standards in that case. Presumably, thejurisdictional basis for even considering and making any finding ofsuch ethical violations arises under the Public Auditor’s duty topromote the overall integrity of the procurement process.

D. OUTLINE OF AN APPEAL:


1. “Island Formal”: Appeals to the OPA are intended to be more “userfriendly”, casual and informal than, for instance, court cases, but at the sametime they are structured to find and extricate fact from perception, realityfrom paranoia, law from lore. They are formal, but not too formal; legalistic,but in a “small claims court” sort of a way. That said, OPA staff do havehigher expectations from lawyers than lay persons, so do not beoverwhelmed by the legalese in the form or format you find frominformation or actions by lawyers. The OPA will not protect you from yourown folly, but they will help cushion you from the folly of any lawyers youmay bump up against.

a. The OPA staff is very helpful in guiding novices through the process(as opposed to the substance or merits) of your claim, within thebounds of their obligation to remain neutral and bureaucratic.

(1) “No person directly or indirectly involved in an Appeal shallcommunicate with the Hearing Officer or the Office ofPublic Auditor staff regarding any evidence, explanation,analysis, or advice, whether written or oral, regarding anymatter at issue in an Appeal” except (2 GAR § 12107):

(a) At a hearing; or

(b) With the consent or in the presence of all otherparties (or counsel); or

(c) By means of papers allowed to be presented in thecase.

(d) OPA staff may entertain questions or complaints thatare not related to the substance of pending appeals.

(e) OPA staff shall report communications regardingpending appeals to all parties.

b. The Public Auditor makes it a practice to attend and participate inhearings of appeals, and, one would hope, formation of theDecision, but doesn’t apparently take much of an operational handin managing the appeals process (supervising, yes; managing, no). The administration is left to OPA staff and the conduct of the processis left to a Hearing Officer.

c. CAVEAT: This outline is bare bones, and not even “typical”. Itdoesn’t canvass every required event or step along the way, just themain points, in the author’s view and judgment. Every case has itsown procedural needs and differences, as you can observe bylooking through the OPA Procurement Appeals files. The


regulations governing Procurement Appeals are mainly found inTitle 2, Division 4, Chapter 12 of the Guam Administrative Rulesand Regulations, 2 GAR § 12101 et seq.

2. First step, the Notice of Appeal.

a. The Public Auditor’s website (http://www.guamopa.org/) containslinks to all the minimally required Rules of Procedure and requiredforms to get you started, including the contents of the Notice ofAppeal. You can also look at other Appeals cases to get an idea ofthe framework and form.

b. Although the Appeal was dismissed because the Appellant failed tofirst protest to the agency, there is an excellent example of a “do-it-yourself” appeal filed, using OPA forms, in In the Appeal of MegaLimited Corporation (the inherent contradiction of which amuses theauthor), OPA-PA-09-001,http://www.guamopa.org/docs/procurement_appeals/Notice_of_Appeal_09_001.PDF .

c. The minimal requirements for filing a NOTICE OF APPEAL, which isthe document you file, in triplicate, to start your appeal, are (2 GAR§ 12104(b)):

(1) Name, mailing and business address of the Appellant.

(2) The bid number or other identification of a solicitation orcontract appealed.

(3) “A concise, logically arranged, and direct statement of thegrounds for Appeal”. This is where the Appellant gets toexplain how the agency got everything so horribly wrong;but keep it brief. It seems those taught to write a brief do theworse job with brevity, the author being particularly wordy.

(4) A statement of what ruling you want from the Public Auditor(the “relief requested”).

(5) Verification of the facts stated.

(6) Signed by the Appellant (including representatives).

(7) Including all documents and documentary evidence.

(8) Including copies of all final official documents from theprotest or contract dispute.

http://(http://www.guamopa.org/

http://www.guamopa.org/docs/procurement_appeals/Notice_of_Appeal_09_001.PDF

http://www.guamopa.org/docs/procurement_appeals/Notice_of_Appeal_09_001.PDF


(9) Plus a statement that there is no pending court action in thematter (the OPA has a form for this).

(10) Plus you are expected to file with the Appeal, or soonthereafter (by the time required for filing Comments on theAgency Report, which is about 20 days), an election whetheryou want your case decided by a hearing (and there’s a formfor this, too). If you do not timely file this election, youwaive your right to a hearing. Generally, the more your caseturns on disputes of facts rather than disputes of law, themore helpful it is for you to have a hearing.

(11) Anything else you consider particularly necessary to help thePublic Auditor understand your case.

d. Once filed, the OPA must notify the affected GovGuam agencywithin 24 hours and deliver a copy of the Notice of Appeal. It is upto the agency to notify any counsel, including the Attorney General.

3. Second Step, the Procurement Record

a. Within five (5) days from filing the Notice of Appeal, (excludesweekends, holidays), the agency must file (and deliver copy toAppellant) the Procurement Record. (2 GAR § 12104(c)(3).)

b. It should be in chronological order, numbered sequentially, tabbed,and indexed. The main GovGuam agencies do a fairly decent job ofputting together the information, to the extent they have actuallymade and kept a “Procurement Record”. See In the Appeal of LatteTreatment Center, discussed below, which cancelled an RFPprincipally for the reason of a deficient record.

(1) 5 GCA § 5249. Record Of Procurement Actions. Eachprocurement officer shall maintain a complete record of eachprocurement. The record shall include the following:

i) the date, time, subject matter and names ofparticipants at any meeting includinggovernment employees that is in any wayrelated to a particular procurement;

ii) a log of all communications betweengovernment employees and any member ofthe public, potential bidder, vendor ormanufacturer which is in any way related tothe procurement;

iii) sound recordings of all pre-bid conferences;negotiations arising from a request forproposals and discussions with vendors


concerning small purchase procurement;iv) brochures and submittals of potential

vendors, manufacturers or contractors, and alldrafts, signed and dated by the draftsman,and other papers or materials used in thedevelopment of specifications; and

v) the requesting agency’s determination ofneed.

(2) 5 GCA § 5250. Certification of Record. [Cf, 2 GAR § 3130] No procurement award shall be made unless the responsibleprocurement officer certifies in writing under penalty ofperjury that he has maintained the record required by §5249 of this Chapter and that it is complete and available forpublic inspection. The certificate is itself apart of the record.

(3) There are many other requirements throughout the law andregulations of determinations, certifications and reports andother detail that must be made in connection withsolicitations, and these should also be included as part of therecord. Feel free to request them if not produced.

4. Objections to OPA jurisdiction (2 GAR § 12104(9)).

a. Any objection or motion addressed to the jurisdiction of the PublicAuditor shall be promptly filed.

b. The Public Auditor shall have the right at any time to raise (orconsider) the issue of her jurisdiction. Jurisdiction is always a dealbreaker. Jurisdiction is what provides authority, so without anyjurisdiction, whenever that is discovered, there is no authority tohear or decide.

c. Disqualification is not the same thing as jurisdiction, strictlyspeaking, but flows from the due process requirement of a fair andimpartial hearing. Even at the US Supreme Court level, the Justiceseach make their own independent judgment as to whether theyshould recuse themselves. Jurisdiction more clearly is a legalquestion than disqualification, except in extremity.

(1) Any request to disqualify the Public Auditor from” hearingthe Appeal” (e.g., conflict of interest or other “recusal” typeobjection) shall be filed within seven (7) days after the noticeof Appeal is filed (but query if the basis of the objection isnot known until later, and query the disconnect with 2 GAR§ 12601, which allows a disqualification issue to be raised“prior to the hearing”; the author is of the view the 7 day


notice provision sows more confusion than necessary andshould be repealed).

d. Dismissals of Appeals due to the recusal (disqualification) of thePublic Auditor have not been infrequent and have likely upset a fewdisappointed bidders because there is no alternative to anadministrative review of a bid protest (other than court action, whichoffers a very deferential hearing of procurement appeals) if thePublic Auditor is recused. Such dismissals have been for suchtenuous reasons as the Public Auditor’s husband had been under thecare of a doctor who was a principal in the business of an Appellant(In the Appeal of Teal Pacific, OPA-PA-08-010; and see a similarresult in In the Appeal of Teal Pacific, OPA-PA-09-002), or herhusband’s legal firm represented one of the parties (In the Appeal ofFar East Equipment, OPA-PA-08-001). Recognizing theinconvenience and injustice of this lack of alternative, the PublicAuditor as asked for legislative change to provide an alternatedesignee in the event of the Public Auditor’s disqualification (see,her “Inaugural Remarks”, January 9, 2009,http://www.guamopa.org/docs/2009_Inaugural_Remarks.pdf ).

5. Third Step, the Agency Report:

a. The guts of the Agency Report is the agency’s answer to the merits ofthe complaints raised in the Appeal, including law and fact. This iswhere the agency gets to tell how the Appellant got everything sohorribly wrong.

b. The Agency Report is meant to be filed ten (10) days after receivingthe Notice of Appeal, except in cases of an appeal of a ContractDispute, when there is a twenty (20) day response time.

c. Much of what is required in the Agency Report has already beenfiled in connection with the Notice of Appeal or ProcurementRecord, such as a copy of the protest and bid, agency decision onthe bid protest, etc.

d. The Agency Report must include “a statement answering theallegation of the Appeal and setting forth findings, actions, andrecommendations in the matter together with any additionalevidence or information deemed necessary in determining thevalidity of the Appeal. The statement shall be fully responsive tothe allegations of the Appeal.” (2 Gar § 12105(g).)

6. Fourth Step, the Appellant’s Comments on Agency Report (2 GAR §12104(c)(4)):

http://www.guamopa.org/docs/2009_Inaugural_Remarks.pdf


a. This is were the Appellant gets to tell the agency, “Did not”.

b. Any interested party may also comment on the Agency Report.

(1) Interested Party means an actual or prospective bidder,offeror, or contractor who appears to have a substantial andreasonable prospect of receiving an award if the Appeal isdenied. (2 GAR § 12102(b).) The author suspects themeaning to probably be a bit broader than that; that “means”probably means “includes”, because the “prospect ofreceiving an award” arguably only refers to a pre-awardsituation, and appeals can be based on actual awards. Moreimportantly, it would not include, e.g., a governmentagency, who is obviously “interested” but elsewhere defined,perhaps, as an “affected” or “using” agency.

c. Comments on the Agency Report must be filed within ten (10) daysof the filing of the Agency Report.

7. Fifth Step, the agency’s Rebuttal to Appellant’s Comments on AgencyReport.

a. This is where the agency gets to tell the Appellant, “Did too”.

b. Rebuttals are meant to be filed within five (5) days of filing theComments to which the rebuttal is addressed.

8. Disregard of Comments (or Rebuttal?) if not timely filed.

a. “The failure of an Appellant or any Interested Party to comply withthe time limits stated in this section may result in resolution of theAppeal without consideration of the comments untimely filed.” (2GAR § 12104(c)(5).) Note definitional issues above. Is it reallyintended that this sanction does not apply to rebuttal or othercomments affected or using agencies?

9. Discovery

a. In court litigation, rules of discovery (where parties can seekinformation from the other side before the trial) are technical, oftentraps, often encouraging gamesmanship. Not so in procurementappeals. Although there are no particular discovery rules providedin the regulations, it would appear to be within the power of theHearing Officer to determine the nature, scope and other mattersconcerning discovery. All you have to do is file a Request forinformation with the Hearing Officer (and answer to the HearingOfficer any questions or concerns) and the Hearing Officer can


direct a response.

(1) In order to expedite consideration of the Appeal, anyadditional information requested by the Hearing Officer shallbe submitted within five (5) working days of receipt of suchrequest. (2 GAR § 12104(c)(7).)

(2) The Hearing Officer has the power to require parties toproduce for examination those relevant witnesses anddocuments under their control and fix time limits forsubmission of documents, as well as compel attendance andtestimony and sanction for nonperformances. (2 GAR §12109.)

10. Role of the Hearing Officer

a. The Hearing Officer should be an attorney, and must be a “Guam-licensed” attorney if contracted (as compared to employed) for thepurpose. The Hearing Officer, among other roles, powers andduties (see generally, 2 GAR §§ 12108, 12109):

(1) may hold informal conferences to settle, simplify, or fix theissues in a proceeding, or to consider other matters that mayaid in the expeditious disposition of the proceeding, byconsent or on motion.

(2) may require parties to state their positions with respect to thevarious issues.

(3) may rule on motions and other procedural items.

(4) may fix time limits for submission of documents.

(5) shall receive written, oral, or otherwise presented testimony,evaluate such testimony and make recommendations to thePublic Auditor.

(6) may consider testimony and evidence submitted by anycompeting bidder or contractor.

(7) may regulate the course of the hearing and the conduct ofthe participants.

(8) may require evidence in addition to that offered by theparties.

(9) may receive, rule on, exclude, or limit evidence, and limit


lines of questioning or testimony which are irrelevant,immaterial, or unduly repetitious.

(10) may impose appropriate sanctions against any party orperson failing to obey an order, including

(a) refusing to allow the disobedient party to advance aclaim or defense.

(b) excluding testimony.

(c) expelling a party or person.

(11) shall prepare a written determination of findings after thehearing, and recommend to the Public Auditor a course ofaction.

11. The Hearing

a. “Hearings shall be as informal as may be reasonable and appropriateunder the circumstances and shall not be bound by statutory rules ofevidence or technical or formal rules of procedure.... The weight tobe attached to evidence presented in any particular form will bewithin the discretion of the hearing Officer.” (2 GAR § 12108(d).)

b. Ordinarily, only one “hearing” will be held, but there could benumerous pre-hearing conferences and motions hearings.

c. Lawyers are not turned away, indeed may attend without theprincipals, but, especially when there are factual disputes or issuesof evidence, the real parties are encouraged to attend andparticipate, subject to rulings about what a witness or potentialwitness can hear in any particular instance. Except for witnesses asnoted, hearings are open to the public.

d. Testimony is normally given under oath or affirmation.

e. Hearings are normally recorded, and the recording eventually madeavailable on the OPA website.

f. Typical hearing process

(1) Each party is allowed to make a short opening statement,broadly describing their case and generally outlining theirclaims (identifying the issues as they see them), beginningwith the Appellant, then the agency, then any interestedparty.


(2) Each party is then allowed to make their opening arguments,specifying the legal points they need to make to raise theirclaim and generally discuss the facts that will support theircase. Rebuttals of the legal issues by opposing parties arethen allowed.

(3) Each party is then allowed to present their witnesses andother evidence (direct evidence), in the same order as theopening statement. The purpose is to establish the facts theysay back their case. You can’t just say something is a factwithout proving it; well, you can, but it won’t carry muchweight.

(a) Opposing parties get a chance to question thetestimony, witnesses and other evidence after it ispresented (cross examination).

(b) The presenting parties then get a chance to clarifyany answers or evidence that came up in the priorcross examination step, but generally not introduceany new evidence that was not introduced in the firstdirect evidence step.

(4) There is usually a wrap-up, where each side gets to give asummation of their case as revealed in the evidencepresented by both sides, or other such closing argument orstatement.

(5) At any point in the proceedings, the Hearing Officer orPublic Auditor can interject questions of parties, witnessesand counsel.

(6) The order and process of a hearing can be much moreflexible, and tends to be when parties are not represented bylawyers. Still, the Hearing Officer will try to control theprocess so that events will unfold in such a manner as tobring out the material, relevant facts, such as they may beavailable on the day. So, COME PREPARED.

g. Since procurement hearings are open to the public, if you arecontemplating being involved in one, the author recommends youattend a hearing and observe before you have to attend asparticipant. The hearing dates are posted under “Detailed Status” foreach case, on the “Procurement Appeals” page of the OPA website.

12. The Decision


a. This is where the Public Auditor gets to tell both the Appellant andthe agency where they each got things so horribly wrong.

b. The Decision of the Public Auditor is meant to be rendered withinthirty (30) days of the hearing, but under-staffing in the OPA, compared to the overwhelming auditing tasks they are obligated toperform with pay-grade professionals in addition to hearingprocurement appeals, has resulted in some Decisions being delayedlonger than that.

c. As indicated above, most Decisions of the Public Auditor repeatalmost verbatim the Findings of the Hearing Officer. The PublicAuditor, in her 2009 Inaugural Remarks, characterized the Findingsand Decision as “redundant”, and recommended that the necessity(2 GAR § 12110(a)) of having both papers be eliminated. Theauthor does not share this view, but if put to a choice, would choosekeeping the Decision rather than the Findings. The author considersit instructive to understand the perspective of the various HearingOfficers in their separate Findings. He also considers it importantthat the Public Auditor have independent input as to her uniqueauditing perspective, and reads both Findings and Decision to try todetermine when and how such a perspective may assert itself. Finally, he feels that the Public Auditor must serve as the centralsource of consistent authority, notwithstanding the various HearingOfficers appearing from time to time.

d. Each Decision is posted to the OPA website.

E. Dateline flow of simple, ideal appeal.

1. Filing of Notice of Appeal

a. Aggrieved Person (Appellant) must file Notice of Appeal OPA within15 days of receipt of rejection (Final Decision) of Protest

2. Notifying others of filing of Notice of Appeal

a. Appellant must serve copy of Notice of Appeal to Agency

(1) Within 24 hours of filing Notice of Appeal

b. OPA must notify Agency the appeal has been filed(1) Within 24 hours

c. Agency notifies Interested Parties

(1) Within 24 hours


d. Agency notifies counsel, including AG

(1) No time limit, but why wait?

3. Agency must file Procurement Record at OPA

a. Agency must file the Procurement Record within five (5) work daysof receipt of the Notice of Appeal

b. No requirement, but good practice, that Appellant be given copy byAgency

4. Any party must file objections to qualification (recusal) of Public Auditor

a. If known, must be filed within seven (7) days after the Notice ofAppeal is filed

5. Agency must file Agency Report at OPA

a. Agency must file the Agency Report (which includes the answer tothe claims in the Notice of Appeal) within ten (10) ”working days” ofreceipt by the agency of the Notice of Appeal.

b. No requirement, but good practice, that Appellant be given copy byAgency

6. Appellant’s or any Interested Party’s Comments on the Agency Report

a. No requirement to file

(1) If filed, must be filed at OPA within ten (10) days after OPA’sreceipt of the Agency Report, with copy delivered to theAgency.

7. Agency’s Rebuttal to any Comments on Agency Report

a. No requirement to file

(1) If filed, within five (5) work days after receipt by OPA of theComments to which rebuttal is directed, with copy deliveredto Appellant (and, presumably, to the Interested Parties).

8. Notice of Hearing (assumes no pre-conferences, motions, etc.)

a. No time is established for OPA to set and serve a Notice of Hearingdate, but must be served at least ten (10) days prior to the Hearing.


9. Decision

a. Within thirty (30) days of the hearing, a Decision and Findings shallbe prepared.

b. In her 2009 Inaugural Remarks, the Public Auditor declared, “ourgoal is to render a decision within 90 days from the day an appeal isfiled.”

F. Appeal Remedies:

1. One major reason there is not much literature about procurement issues isthat the remedies available rarely make anyone whole. There just isn’tmuch money in it for most vendors, even when vendors are vindicated, andthe public purse always picks up the costs regardless who wins the protests,so lawyers don’t tend to spend much time pursuing procurement matters;principle is one of the last considerations, and principal one of the first.

2. Money:

a. “Reasonable Costs” are allowed but not damages (5 GCA § 5425(h)):

(1) For the put-upon (that is, should have got the award butdidn’t) Protestant, “Reasonable Costs” at the Protest levelincludes bid preparation costs BUT NOT attorney’s fees norlost profits or other such damages. (2 GAR § 9101(g)(2).)

(a) The inclusion of attorney’s fees as part of costs isdifferent at the Appeal level from the rule at theProtest level. As noted above, such fees are notallowed in a Protest Decision. However, “[t]hePublic Auditor shall have the power to assess” thefees as part of reasonable costs at the Appeal level. (5 GCA § 5425(h)(2).)

(b) Damages are not allowed. Damages include suchthings as lost profits. Bear in mind that, withoutaward, there is no contract, and no contract, nocontract damages.

(2) For the put-upon (that is subjected to a protest made“fraudulently, frivolously or solely to disrupt theprocurement process”) government/agency, “ReasonableCosts” INCLUDES attorney’s fees, both at Protest and Appeallevels.


(a) Again, no damages (“costs” but not “damages”), suchas price increases due to delays, expenses incurred toprovide interim needed goods or services, or the like.

b. “Interest on amounts ultimately determined to be due to acontractor or the Territory shall be payable at the statutory rateapplicable to judgments from the date the claim arose through thedate of decision or judgment, whichever is later.” (5 GCA § 5475.) Doesn’t include “through to the date actually paid”! The GuamCompiler’s Comment indicates the judgment rate is 6% and thatpost-judgment through to payment interest might be payable underthe Civil Procedure or Government Claims codes.

c. There is probably good policy reasoning for limiting the damagesthat might otherwise flow to either the bidders or government (undera non-contract theory): it puts an onus on everyone to try to facilitatea quick resolution of controversies and move on, rather than offer acarrot on a stick to extract as big a damage award as possible.

3. Other remedies:

a. Prior to award, improper solicitations and proposed awards must beeither cancelled or revised to comply with the law, as determinedby the decision-maker (Agency, OPA or court, as the case may be (5GCA § 5450)). (5 GCA § 5451.)

(1) In holding that a pre-award solicitation must be cancelled,the Public Auditor said, the solicitation “cannot be revised tocomply with the law due to the fact that it would be difficultif not impossible to create an accurate and completeprocurement record at this time.” (In the Appeal of LatteTreatment Center, Inc., OPA-PA-08-008, at p 19.)

b. Remedies after award for improper solicitations or awards dependon whether the person awarded the contract acted fraudulently orin bad faith (5 GCA § 5452):

(1) If the person did (act fraudulently or in bad faith),

(a) The contract may be ratified and affirmed if in thebest interests of the Territory; or

(b) The contract may be declared null and void;

(c) There is no explicit relief offered to the vendor wholost out on the award, but consider possibility ofbringing civil action against them for the economic


tort of intentional interference with prospectiveeconomic advantage or other unfair competition orfraud tort.

i) Note: California, but not Guam, has a generalstatutory “Unfair Competition” law, whichincludes "any unlawful, unfair or fraudulentbusiness act or practice and unfair, deceptive,untrue or misleading advertising." CaliforniaBusiness and Professions Code § 17200.

(d) Contractors can be suspended (up to three months)or debarred (up to two years) from consideration forany government contracts for various reasons,including “filing a frivolous or fraudulent petition,protest or appeal”. (5 GCA § 5426.)

(e) Suspension or debarment action is normally broughtby the agency (CPO, DPW, head of Agency, etc.),and those decisions are reviewable by the PublicAuditor. “Any member of the public may petitionthe [agency] to take action to debar or suspend....Aninvestigation of each petition shall be conductedpromptly and a written report should be made offindings of fact and action taken.” (Id.)

(2) If the person did not (act fraudulently or in bad faith):

(a) The contract may be ratified and affirmed if in thebest interests of the Territory; or

(b) The contract may be terminated [compared to “nulland void” when fraud or bad faith] and the personawarded the contract shall be compensated for theactual expenses reasonably incurred under thecontract (to date of termination), plus a reasonableprofit, prior to termination. What is reasonable;more than originally bid??

i) The Guam Publications appeal, supra, madesome confusing statements on this subject. Although the Decision found no fraudulent orbad faith act, it declared the award “void”(Decision, p 16.) It then decided to“terminate” the award (at p 17).

(c) Regardless whether the contract was awarded


improperly, there is no provision penalizing thegovernment for the improper award of the contract,no lost profits for the losing vendor, and the losingvendor has only her pride and principle.

(3) The Public Auditor has revised the outcome of a solicitationafter award, in the Guam Publications appeal, supra. This isan interesting use of her power when the before and afteraward remedies are examined, as discussed above. Beforethe award, the solicitation can be revised to comply withlaw (5 GCA § 5451(b)), but there is no such option for post-award remedies, such remedies being either terminating orvoiding the contract, on the one hand, or ratifying thecontract on the other. In Guam Publications, the PublicAuditor terminated the contract which had been awarded tothe lowest bidder, then awarded the contract to theremaining, higher bidder. Given that the law (5 GCA §§5451 and 5452) seems to require only certain specificremedies, and making an award to another bidder after theawarded contract is terminated is not one of them, then onemust question the result; perhaps the appropriate resultwould have been to simply re-solicit. The author appreciatesthe desire to avoid any re-bid, and thinks the Public Auditorprobably should be able to order the award be given to thenext responsive and responsible bidder, but fears that maynot be within her powers as written.

G. Request for Reconsideration

1. Unlike protests, there is no specific regulatory authority for asking the PublicAuditor to reconsider her Decision. 5 GCA § 5425(f) says her decision “isfinal unless a person adversely affected” takes appeal to the Superior Court,but does not expressly prevent her reconsideration and, theoretically, if shechanged her mind she could then issue a final final decision. In In theAppeal of [IBSS vs GPSS(2)] the Public Auditor did respond to a Request forReconsideration, though the Request was pretty much summarily deniedand the response seemed to the author as though she was uncomfortable ineven considering or rendering it.

XIX. Some issues relating to contract performance

A. In this Article, we assume there has been no procurement controversy and acontract has been awarded and entered into.

B. Performance Bonding: (Remember: “bond” means “security”.)


1. The purpose of requiring security is generally to provide the government asource of ready funds if the contractor fails to perform and the governmentsuffers damages because of that breach. It is not intended to constitute apenalty nor provide funds where there has been no breach of the contract.

a. The fundamental notion is one of contract law. In contract law, aparty who materially breaches (fails to render the agreedperformance) is liable for the reasonably foreseeable damages thatresult from the breach, including an agreed “liquidated” amountwhere the damage is certain but hard to calculate.

b. To the extent the bonded amount exceeds the amount of damagessuffered, the excess security is released. To the extent the bondedamount is insufficient to cover the damages, the contractor remainsliable to pay the deficiency. Beware that if there is a call on thesecurity, the security provider will seek to recover what it has paidout from the contractor.

c. Discussion of contract damages and other remedies, as well as thelaw of surety, is well beyond the scope of this paper.

2. Services or supplies. As discussed above in the section on Bid Bonding, thebid security for supplies and services is intended to carry over, withoutrelease, to cover the period “until delivery of the supplies or services”. Thus, in this case, the bid bond also serves as the performance bond, and noseparate performance bond is required. (5 GCA § 5212(g).)

a. Note, however, that some solicitations require service and warrantyand perhaps other conditions, and to the extent those conditionscover any executory contract performance obligation after delivery,this provision does not provide the full security for contractperformance that the government should reasonably require.

b. Note, again, as with bid bonds, that the regulations have not takeninto account the change in the law, and continue to purport toallow, a performance bond for contracts for supplies or services. (See, 2 GAR §§ 3102(f) and 3109(c)(4).) This regulation is nullifiedby the changes to the law, however.

3. Construction contracts. As with the wide variety of management andcontract types, the considerations regarding the need of bonding forconstruction is varied and dependent on unique circumstances.

a. Performance bond: A performance bond indemnifies the territoryagainst loss resulting from the failure of the contractor to perform aconstruction contract in accordance with the plans andspecifications. 2 GAR § 5104(1)(b).) A performance bond is


required for all construction contracts in excess of $25,000 in theamount of 100% of the contract price, but it can be reduced in somecircumstances to as little as 50% of such value, or more as portionsof the work is completed. (§ 5104(1)(a).)

b. Payment bond: A payment bond guarantees payment andprotection for those furnishing labor and materials to the contractoror its subcontractors for the work bonded. The payment bond isrequired in the same percentage amount, and can be reduced, aswith performance bonds. (2 GAR § 5104(2).)

C. Contract disputes. Contract disputes concern a controversy between a contractorand the government arising after the solicitation and award, including “withoutlimitation controversies based upon breach of contract, mistake, misrepresentation,or other cause for contract modification or rescission.” (5 GCA § 5427(a).) “Theword controversy is meant to be broad and all-encompassing. It includes the fullspectrum of disagreements from pricing of routine contract changes to claims ofbreach of contract.” (2 GAR § 9103(b).)

1. Procurement Act or Claims Act? The simple matter of resolving contractdisputes is muddied by possible confusing jurisdictions and procedurescaused by possibly conflicting provisions between the Procurement Act andthe Government Claims Act.

a. It is worth noting that the Procurement Act provisions regardingcontract disputes was adopted by the 18 Guam Legislature whileth

the Government Claims Act (5 GCA § 6101) was adopted by the 17th

Guam Legislature (and intended to mostly continue the effect of theprior claims act provisions – 5 GCA § 6107). For this and otherreasons alluded to below, the author believes the Procurement Actprevails; but, as he has had no practical experience with the GuamClaims Act, he is not laying his reputation on the line over thatstatement.

b. See, Sumitomo Construction, Co. vs. Government of Guam,discussed below regarding pre-judgment interest.

2. Who hears contract disputes?

a. “The Chief Procurement Officer, the Director of Public Works, thehead of a purchasing agency, or a designee of one of these officers isauthorized, prior to commencement of an action in a courtconcerning the controversy, to settle and resolve a controversydescribed in Subsection (a) of this Section.” (5 GCA § 5427(b).)

(1) This provision clearly delegates authority to settle andresolve contract “controversies” between contractors and the


government to procurement officials. How is thatsubstantively different from a “claim” based on a contractwithin the purview of the Government Claims Act (see, 5GCA § 6105(a), which for the purposes of the Claims Act,waives government immunity “for all expenses incurred inreliance upon a contract to which the Government of Guamis a party”)?

(2) Note, however, that the procurement regulations, in thecontext of the delegation of settlement and review authorityover contract controversies, proclaim “[t]he settlement orresolution of controversies involving claims is subject to theGovernment Claims Act.” (2 GAR § 9103(c)(2).)

(3) The Procurement Regulations, moreover, create moreconfusion by stating, “Subject to Subsection 9103(c)(2) ofthis Section [which refers to the Claims Act], unless aprovision of the contract specifies that the authority to settleand resolve controversies and to issue decisions is reservedto the Chief Procurement Officer, the Director of PublicWorks, or the head of a Purchasing Agency, such authorityis hereby delegated to the Procurement Officer.” (2 GAR §9103(c)(1).)

(4) The author believes that procurement regulation is invalid, tothe extent it makes an exception for contract controversies“subject to” the Claims Act, as an interpretation beyond theclear authority given by the Procurement Act. The onlyreason apparent to the author for such a provision is toreiterate that contract controversies, as governed by theProcurement Act, involve controversies between acontractor and the government, and that a controversyinvolving any other party (not a contractor) acting in relianceon a contract must come under the Claims Act. The authorfinds it hard to envision how any such other controversywould arise in any practical sense, but should it, the ClaimsAct would prevail.

(5) If, indeed, the Claims Act prevails, only a Claims Officercould settle and resolve such contract disputes. (See, 5 GCA§§ 6201 and 6206.)

3. Contract dispute procedure. The Procurement Act contemplates thatcontract controversies will, where possible, be “resolved by mutualagreement”. (5 GCA § 5427(c).) The procurement regulations flesh thisconcept out as follows:


a. “It is the territory's policy, consistent with this Act, to try to resolveall controversies by mutual agreement without litigation. Inappropriate circumstances, informal discussions between the partiescan aid in the resolution of differences by mutual agreement and areencouraged. If such informal discussions do not resolve thecontroversy, individuals who have not participated substantially inthe matter in controversy may be brought in to conduct discussionsif this is feasible. Independent committees and panels which reviewcontroversies expeditiously and informally with a view to fairsettlement possibilities also are encouraged at this stage.” (2 GAR §9103(a)(1).)

b. Where mutual agreement does not result in a resolution to thegovernment’s satisfaction, it will must “promptly issue” a finalwritten decision stating the reasons for the decision and advising thecontractor of its rights of review. (5 GCA § 5427(c).)

(1) Again, the regulations take an unfounded liberty with the lawhere, saying, “the Procurement Officer shall, after writtenrequest by the contractor for a final decision, promptly issuea written decision.” That is patently wrong and without legalauthority. There is no precondition to a prompt decision.

c. If the government does not promptly issue a decision, the contractorcan request one, and the agency has 60 days from that request toissue the decision, upon failure of which the contractor can proceedas though there was an adverse decision taken. (5 GCA § 5427(f).)

(1) Note that this is in contrast to a Protest of a solicitation,where a protester cannot proceed until the agency renders adecision. The author suggests a similar provision should beadded to the protest procedure.

D. Appeals from Contract Disputes.

1. A contract dispute decision is final and conclusive as between the contractorand the government unless fraudulent or unless the contractor timelyappeals the decision to the OPA. (5 GCA § 5427(e).)

2. The contract dispute appeal must be filed by an “aggrieved contractor”within 60 days of receipt of the contract dispute decision or, if no decision ispromptly forthcoming as expected, within 60 days after the contractor givesthe government agency a written request for final decision. (5 GCA §5706(b); see, 2 GAR § 12301(a).)

3. There are no specific rules or regulations adopted concerning the manner oftaking a contract dispute appeal to OPA, but it could be expected that the


procedure and form would substantially mirror solicitation protestprocedure.

XX. Getting paid, or not, as the case may be

A. Prompt Payment Act (5 GCA § 22501, et seq.). That’s the official title, not reality.

1. Interest

a. Each government agency which receives property or services from abusiness but which does not make payment for each such completedelivered item of property or service by the required payment date,shall pay an interest penalty to such business on the amount of thepayment which is due as specified in this Article. (5 GCA §22503(a).)

b. Interest shall be computed at the same interest rate assessed onunpaid income taxes owed by taxpayers. (5 GCA § 22503(b).)

c. Any amount of an interest penalty which remains unpaid at the endof any thirty-day period shall be added to the principle amount ofthe debt and thereafter interest penalties shall accrue on such addedamount. (5 GCA § 22503(c).)

d. Claims for interest penalties which a government agency has failedto pay may be filed under statutes governing contract disputes withthe government of Guam. (5 GCA § 22506(a).)

e. Interest penalties shall not continue to accrue after the filing of aclaim for such penalties, or for more than one (1) year, whichevercomes first. (5 GCA § 22506(b).)

f. Note a couple of things. First, although called a “claim”, demandsfor payment of interest fall under the rubric of contract disputes,procedurally, so are not pursued under the Government Claims Actprocedures. Second, you can only get up to one year’s interest,which ain’t much ado about anything and does absolutely nothing toassure prompt payment.

2. Discounted settlements

a. If a business offers a government agency a discount from the amountotherwise due under a contract for property or services in exchangefor payment within such specified period of time, the governmentagency may make payment in an amount equal to the discountedprice only if payment is made within such specified period of time.


5 GCA § 22504(a).)

b. If you’re willing to take pennies on the dollar for your marginalcontract profits, here’s your chance.

B. Non Prompt Payment Act Interest

1. Interest on amounts ultimately determined to be due to a contractor or theTerritory, based on a contract dispute, shall be payable at the statutory rateapplicable to judgments from the date the claim arose through the date ofdecision or judgment, whichever is later. (5 GCA § 5475.)

a. In Sumitomo Construction, Co., vs. Government of Guam, CV 1589-99, the Superior Court judge declared that prejudgment interest ispayable to a contractor in a contract dispute based on thatProcurement Code provision notwithstanding the Claims Act doesnot allow prejudgment interest in tort claims.

2. This rate is currently 6% and this authority for interest is not limited to oneyear.

C. Promissory notes (5 GCA § 22415)

1. Any creditor of the government of Guam (other than a tort claimant with anunadjudicated claim) who is not paid within thirty (30) days of filing hisclaim may request that the Director of Administration issue a registered,nontransferable promissory note in the amount of his claim from thegovernment of Guam, bearing interest at six percent (6%) per annum andmaturing one year from its date of issue.

2. This is another empty remedy, with plenty of limitations and little practicalutility. Promise them anything, but give them a page.

D. Once a contract is fully performed, if the government fails to pay as promised, theappropriate avenue for direct payment on the contract is by first making a claimunder the Government Claims Act, not the contract dispute mechanism. (5 GCA §6105(a): “if the contract has been substantially completed, expectation damagesmay be awarded”.)

1. A full review of the Government Claims Act is beyond the scope of thispaper. See generally, 5 GCA § 6101, et seq.

2. The claim must first be made to the Claims Officer of the agency involved,must exceed $1,000 and be made within 18 months from “the date theclaim arose”.


XXI. Public enforcement of unauthorized procurement spending

A. Guam taxpayers have standing to bring suit against improper spending.

B. “Any taxpayer who is a resident of Guam shall have standing to sue the governmentof Guam and any officer, agent, contractor, or employee of the Executive Branch ofthe government of Guam for the purpose of enjoining any officer, agent, contractor,or employee of the Executive Branch of the government of Guam from expendingmoney without proper appropriation, without proper authority, illegally, or contraryto law, and to obtain a personal judgment in the courts of Guam against suchofficers, agents, contractors, or employees of the government of Guam and in favorof the Government of Guam for the return to the Government of Guam of anymoney which has been expended without proper appropriation, without properauthority, illegally, or contrary to law.” (5 GCA § 7103.)

C. “The Attorney General shall take all steps necessary to collect any judgmentobtained under this Chapter. If no collection on such judgment is made by theAttorney General within six months of the date of the judgment, then the taxpayerand resident who originally obtained the judgment shall have standing to pursueexecution and collection on the judgment on behalf of the government of Guam,under the supervision of the Superior Court.” (5 GCA § 7109.)

D. “The court shall award reasonable costs and attorney’s fees in favor of the taxpayerand resident who brings suit under this Chapter, against any defendants found liableunder this Chapter.” (5 GCA § 7112.)

E. “The Senators and the Guam Legislature shall have standing to sue under thisChapter. The Legislative Counsel, or Assistant Legislative Counsel, may, as a part ofhis or her duties for the Guam Legislature, represent members of the GuamLegislature or the Guam Legislature, or both, in bringing suit under this Chapter,provided that in such cases, attorney=s fees will not be allowed.” (5 GCA § 7115.)

XXII. The Courts

A. This paper will not venture into the bailiwick of the courts, insofar as matters ofprocurement are concerned. But, as has already been noted, for the AggrievedPerson, there are many advantages to be had to taking an Appeal, first, to the PublicAuditor rather than the courts.

B. 5 GCA § 5425(e) indicates protest decisions may be taken to the Public Auditor,and 5 GCA § 5480 states the Superior Court “shall have jurisdiction over an actionbetween the Territory and a bidder, offeror, or contractor, either actual orprospective, to determine whether a solicitation or award of a contract is inaccordance [with the laws and regulations].” This would seem to make it optionalwhether to appeal a protest decision to either the OPA or the Superior Court.


However, 5 GCA § 5481(a) restricts the filing of any such action until 14 days afterreceipt of “a final administrative decision”, and 5 GCA § 5425(f) says an OPAdecision is final unless appealed to the Superior Court under § 5480. Thatlanguage, and the general notion of exhaustion of administrative remedies, indicatesthat no such action should be commenced at the Superior Court unless it has beenfirst administratively determined by the OPA.

C. It must also be remembered, should any part of the Appeal to OPA be taken up in acourt action (for instance, an injunction action), the OPA matter will be, at best, puton hold, if not entirely removed to the court, until or unless the court returns thematter to the Public Auditor.

1. “If an action concerning the procurement under Appeal has commenced incourt, the Public Auditor shall not act on the Appeal except to notify theparties and decline the matter due to Judicial involvement. This sectionshall not apply where a court requests the decision of the Public Auditor.” (2 GAR § 12103(b).)

D. It must also be remembered that Decisions and Rulings of the courts pre-empt orover-rule the Decisions of the Public Auditor, and provide their own uniquecontributions to the body of Guam Procurement Law.

E. At present, there has only been one OPA Decision finally determined by theSuperior Court, and that was taken not by way of appeal of the OPA decision underthe appeal authorized by 5 GCA § 5707(a) of the Procurement Act, but by way ofwrit of mandate as contemplated by the Administrative Adjudication Law, 9 GCA §9241. See, TRC Environmental Corporation SP 160-07, at page 4. Two otherappeals have been taken and are at present pending, as noted in the PublicAuditor’s 2008 Public Report, page 14(http://www.guamopa.org/docs/2008AnnualReport.pdf ). One of those pendingmatters, In the Appeal of Town House Department Stores, Inc., dba Island BusinessSystems & Supplies, by Xerox Corporation, Appellant, SP 240-08 (arising from theOPA Decision in In the Appeal of [IBSS vs GPSS(2)] ), was commenced by actiondenominated “Complaint and Appeal of Decision by the Office of the PublicAuditor...”, invoking the jurisdiction of 5 GCA § 5707.

F. The explicit language of 5 GCA § 5707 is a bit confusing to the author, referring toappeal procedures to be conducted pursuant to chapters and articles of law that areinconsistent with the Compiler’s codification. It is also permissive, saying an appealmay be taken to the Superior Court, which does not expressly pre-empt the writ ofmandate procedure under the Administrative Adjudication Law. It will likely be thecase that some guidance will be necessary from the Court to determine the propermeans by which to seek review of an OPA Decision, and whether there areprocedural or substantive advantages to one course of action over another.

http://(http://www.guamopa.org/docs/2008AnnualReport.pdf


XXIII. A review (with commentary and full disclaimer) of some of the OPA Decisions, or issuesin Decisions, not discussed or only touched upon, in the outline above, with all duerespect. All Decisions of the Public Auditor are found on the OPA website, as mentionedabove. In addition, the Public Auditor has included her own Summary of all OPA appealsthrough OPA-PA-08-010 in Appendix 5 to her 2008 Annual Report,http://www.guamopa.org/docs/2008AnnualReport.pdf .

1. OPA-PA-06-001, In the Appeal of the Debarment of Rex International, Inc.(vs GWA)

a. This case is fascinating as being the first case ever heard by thePublic Auditor, but more so because it is the only case to datedealing with the power of an agency (here, GWA) to debar acontractor/bidder and the authority of the Public Auditor to hear theappeal. Appeal and Agency Report were filed. Unfortunatelyfor students of Guam procurement, the appeal was withdrawnwithout explanation and the case dismissed.

2. OPA-PA-06-002, In the Appeal of Far East Equipment Company, LLC (vsPAG)

a. This case involved an apparent multi-step bid for crane gantry at thePort of Guam. The issues involved the appropriate amount ofbidding time for a complex bid, and the alleged failure of the agencyto respond timely to questions, and the agency’s material changes tothe bid, and the agency’s failure to communicate answers andchanges to all bidders.

b. The Appeal, Agency Report and other matters were filed and ahearing date set before the agency cancelled the bids and the appealwas dismissed.

3. OPA-PA-06-003, In the Appeal of RadioCom (vs GSA for Office ofHomeland Security)

a. This case went all the way through hearing and Decision, so this isthe Public Auditor’s first Decision.

b. This was an appeal of a sole source procurement. The contractorprepared the specifications, and GSA accepted, and incorporated inits own determination, without question, the contractor’s and OHS’assessment that the supplies were incompatible with otherequipment, justifying the sole source procurement. Theprocurement was funded from Federal funds.

c. The Decision held that

http://www.guamopa.org/docs/2008AnnualReport.pdf


(1) the Procurement Act controlled notwithstanding the use ofFederal funds.

(2) the specifications did not include any reference tocompatibility, and the compatibility argument wasmanufactured after the fact to justify sole source.

(3) the CPO must monitor specifications and make anindependent assessment of whether there are other potentialcontractors and cannot simply rely on the representations ofvendors or the using/purchasing agency, especially “when aresponsible source has expressed interest in theprocurement, the agency must make reasonable efforts topermit the source to compete”.

4. OPA-PA-07-002, In the Appeal of Emission Technologies, Inc. (vs GPA)

a. Discussion of the OPA Decision must begin with the caveat that ithas been vacated by the Guam Superior Court, TRC EnvironmentalCorporation, SP 160-07. Thus, the OPA Decision is purelyacademic and without legal precedent.

b. This Appeal involved issues of the timeliness of filing an Appeal, andthe “responsiveness” of a bid when the bidder does not hold aGuam business license at the time the bid is submitted, as well as anissue of “local preference”. The Appeal was brought by a bidderwho had not been determined to be the best offeror.

(1) The Superior Court vacated the Decision on the grounds oftiming, finding the Public Auditor lacked jurisdiction toconsider the Appeal to her office because it was untimelyfiled beyond the 15 day filing period. Along the way, theCourt disagreed with the OPA’s Decision as to the need foran offeror to have business license at the time when an offeris submitted in response to an RFP.

c. An issue not argued or considered was that the solicitation was inthe form of an RFP, and the services sought were for a continuousemissions monitoring system. As indicated in the outline above, it isquestionable whether these services fall within the scope of“professional services”. But, anyway, that is why the appeal is froma disappointed offeror rather than a higher bidder.

d. The timing issue is complicated by whether communicationsconstituted a request for reconsideration or a second protest. TheDecision seemed prepared to accept it was a request forreconsideration and telegraphed the impression it would consider


whether that tolled the appeal filing time, but found that the appealto OPA was timely anyway, so we didn’t get a firm decision on thereconsideration tolling question. The Superior Court construed thecommunications between the protestor, agency and OPA to theeffect that the initial protest and reply constituted the full protest anddenial, making the “formal” appeal to the OPA untimely.

e. On the substantive issue of the Guam business license, the Decisionheld that, because the RFP required a Guam business license to beconsidered for award, the failure to have it rendered the offeror’sproposal nonresponsive. The author suggests the J&G Constructioncase (a “matter of first impression”) contradicts and overrules thisholding because, first, qualification to conduct business is what theGuam business license issue is all about and that is a matter ofbidder responsibility, not responsiveness; and, second, thesolicitation documents (IFB/RFP) cannot by any mandate convert anissue of responsibility into an issue of responsiveness.

f. The local preference issue arose because there was only oneapparent supplier of the services sought on-island, and GPA soughtoffers for an off-island offeror. The Decision held there could be noaward to an off-island offeror until its offered price is compared to alocal offeror’s price and the 15% local preference differential isdetermined.

5. OPA-PA-07-006, In the Appeal of Great West Retirement Services (vsGovGuam Retirement Fund)

a. This Appeal is from an RFP. The issue was whether the RetirementFund improperly refused to negotiate in good faith. The Decisionheld it is improper to discontinue negotiations with a best qualifiedofferor (and commence negotiations with the next up the list) beforethere has been a determination that its best and final offer is not fairand reasonable.

6. OPA-PA-07-007, In the Appeal of Dick Pacific Construction Company, Ltd(vs GIAA)

a. This involved the issue whether failure to provide personnel résumésand proof of a Guam business license in the bid envelope asmandated renders the bid non-responsive. In this case that was,indeed, the holding. While that case was distinguished anddiscussed in the context of the J&G Construction appeal which heldthe IFB cannot convert matters of responsibility into issues ofresponsiveness, there was an additional element worth mentioning.

b. This case involved, also, the requirement that the bidder, or a


bidder’s subcontractor, have a specialty reinforced steel license,although the main part of the construction work solicited was toimprove airport utilities infrastructure. In the outline above, theauthor made the argument that, although usually an issue ofresponsibility, issues of speciality licensure can be considered anissue of responsiveness where the licensed work is the thing whichthe government desires. In this case, it is arguable that the licensedwork is only incidental to the broader solicitation for wholeinfrastructure, so the specialty steel reinforcement license should beconsidered an issue of bidder responsibility, not responsiveness.

c. Cibinic and Nash (at p 414) admit that decisions concerning therequirement of licenses, as an issue of responsibility, “have beensomewhat confusing”. They distill two rules:

(1) “First, an affirmative determination of responsibility may bemade if the offeror can obtain the license or permit prior tothe time of performance even though it is has not beenobtained prior to award.”

(2) “Second, a [negative] determination of nonresponsibility willbe upheld if the contracting officer reasonably concludes thata required or necessary license or permit will, if notobtained, impair performance.”

7. OPA-PA-07-008, In the Appeal of Advance Management, Inc. (vs GPSS)

a. This appeal was dismissed, but raised the interesting issue whetherthe OPA has jurisdiction to hear issues of Wage Determinationcompliance. The case was dismissed on the jurisdictional groundthat there had been no protest to or decision from the agency.

b. 5 GCA § 5801 imposes on all contractors “for the provision of aservice to” GovGuam to pay those of their employees whosepurpose is the direct delivery of the service contracted, wage ratesestablished by the Guam DOL Wage Determination schedule. Callthis the Wage Determination law. It is a labor law obligation, not aprocurement obligation. It is nevertheless found in the standardterms and conditions of most GovGuam IFBs and RFPs, and can bereferred to there as the Wage Determination clause.

c. 5 GCA § 5805 creates procurement confusion by directing the CPOto “require bidders to submit declarations [made under penalty ofperjury] to demonstrate their compliance with” the WageDetermination law. Such a demonstration is not languageexpressing any promissory or contractual obligation.


d. The Notice of Appeal did not clearly specify the ground for protest,alleging merely “a serious defect in the bid and award process”, butthe gist of the complaint seemed to be that the winning bidder wasnon-responsive or non-responsible because its pricing revealed itmost likely would not comply with the Wage Determinationrequirement, and the agency should have realized that and wassomehow “complicit” in the Wage Determination violation bymaking the award.

(1) There is a colorable legal basis for making that argumentbecause 5 GCA § 5211(g) requires that the award only begiven to a bidder “whose bid amount is sufficient to complywith [the Wage Determination law]”. The problem is, thelaw does not require, as a condition of procurement award,compliance with the specifics of the Wage Determinationlaw; it requires only that the bid award give the bidderenough money, in total, to comply. The author believes thatis a standard whose application is too vague and uncertain toenforce, or for an agency to judge.

(2) Note also that § 5211 deals specifically and only withCompetitive Sealed Bidding. Thus, § 5211(g) only applies toaward by Competitive Sealed Bids, so this wage limitation onawards would not appear to apply to other methods ofsource selection, the most obvious one being RFPs forprofessional services.

e. This is an example of a provision appearing in a solicitation that hasnothing to do with the procurement, solicitation or contract. It isintended to implement a collateral legal obligation and merelyclouds procurement law. As such, it is not a ground for agencyprotest under 5 GCA § 5425(a) (i.e., made in connection with themethod of source selection, solicitation or award), which is apredicate to a procurement appeal to OPA. It is not, therefore,within the jurisdiction of OPA to enforce such a provision.

f. Furthermore, 5 GCA § 5803 identifies Guam DPL as the agencygiven oversight and enforcement authority of the WageDetermination law, and § 5804 provides a separate sanction(disqualification from GovGuam contracting) for a contractor whoviolates the clause, which may only be appealed to the SuperiorCourt. Therefore, any alleged “violation” of the WageDetermination clause should not even be considered a contractdispute between the procuring agency and the contractor. TheWage Determination clause in a solicitation is merely intended togive notice to bidders/offerors of their labor law obligations; it doesnot imply or import any contractual obligation between the


soliciting agency and the contractor.

g. In Pacific Security Alarm, Inc., vs Guam Power Authority, CV 1304-04, the judge distinguished a New York case that found a bid to benonresponsive if it did not comply with the prevailing wagerequirement and noted that, while Guam law mandates payment ofa prevailing wage, “it does not mandate that benefits be included inprice quotes for Invitations for Bids”.

8. OPA-PA-07-009, In the Appeal of Pacific Security Alarm, Inc. (vs GMHA)

a. This involved an IFB. The agency chose to cancel the bids after thebids were opened and the bid prices made known.

b. The Decision held an agency can only “cancel” a bid prior to bidopening. After bid opening, an agency may only “reject” all bids (asa means of disposing of the solicitation).

c. The Decision then held the cancellation was void, and it was up tothe agency as to how to proceed with dealing with the bids.

d. Here there was, however, a game-changing event that occurredbetween the time the agency wrongly cancelled the bid and thetime, after the Decision, when it had to consider the bids. At thetime of cancellation, the agency lacked funds to meet the bid, soclearly that would have been adequate reason to reject “in the bestinterests of the agency”. But, by the time the Decision was made,the agency had obtained sufficient funds, so rejecting all bids wasnot then justified by lack of funds. It appears this left the agencywith the only option of awarding the bid to the lowest bidder.

e. Compare the reasons allowed to cancel a bid before opening (2GAR § 3115(d)(1)(B)) with reasons allowed to reject all bids afteropening (§ 3115(d)(2)(A).

9. OPA-PA-07-010, In the Appeal of Far East Equipment Company, LLC (vsGSA for PAG)

a. This was an appeal of an IFB, involving a dispute over what thespecifications required and what the 2 bidders could and did offer. The requirements were for particularly sized and powered fork lifts. The Decision determined that the Appellant, who bid the lowestprice, admitted it did not meet the exact specifications, but arguedthe proposed winner was non-responsive because its offered fork liftexceeded the minimum specifications; and that Appellant onlydeviated from the specifications by an immaterial degree (see, 2GAR § 3109(m)(4)(B): a minor mistake where the effect on quality is


negligible so does not prejudice other bidders.).

b. The Decision noted the minimal difference between Appellant’s lowbid product and the specifications but did not critically dispute theagency’s determination of non-responsiveness based on its ownjudgment of materiality of Appellant’s deviation from specifications.

c. It is true that as between responsive bids, the lowest price wins evenif another bid offers a product with superior specifications. “Theacceptability evaluation is not conducted for the purpose ofdetermining whether one bidder’s item is superior to another, butonly to determine that a bidder’s offering is acceptable as set forth inthe [IFB].” (2 GAR § 3109(n)(3).)

d. Second, compare this to the O&M Energy appeal mentioned above(OPA-PA-08-004) where the Public Auditor very carefullyscrutinized the agency’s determination of materiality, whereas herethe Decision was deferential. Here, the difference in bid prices wasrelatively minimal, but in O&M the difference was extreme.

e. The author observes that where a bidder has a product that is closebut not up to specifications, the better time to protest is as soon asthe specifications are known, not after the bid is opened. Thisobservation is coupled with a caveat that the usual course is for aparty to seek clarification, but if that is not forthcoming, or coming toyour satisfaction, be mindful of the calendar and timely file yourprotest on the IFB on the basis of unduly restrictive specifications. Ifthe specifications truly are only minimally different from anotherproduct, and particularly where the products wanted are standard,commercially available ones, the agency should show reasonableacceptance of enough flexibility in the specifications to encouragecompetition, so long as its minimum requirements can be met. But,once the bids are submitted and opened, it is too late to make thatargument.

10. OPA-PA-07-011, In the Appeal of JMI Medical Systems, Inc. (vs GMHA)

a. This was an Appeal involving an IFB. The Appellant was not the lowbidder; indeed, the low bid was so low that the agency decidedduring the course of events to award a contract for double thequantity of product specified in the IFB. There was much confusionon Appellant’s part whether the bid was for equipment and suppliesor for the equipment alone. The Appellant protested that the lowbid was non-responsive because it did not include a bid for bothsupplies and equipment, although the Appellant had bid both.


b. The agency issued its final decision on the protest after a request forreconsideration and the next day awarded the contract to the lowbidder, issuing two purchase orders for two pieces of the sameequipment.

c. The Public Auditor found the bid clearly only sought equipment (notequipment and supplies), so the low bid was responsive.

d. Curiously, the Decision raised an issue of the automatic stay, saying“after the appeal began, GMHA continued with the award andpurchase.” This is curious because the award and purchase orderswere issued on November 28, yet the Appeal was not filed untilDecember 12. What was left to be done that violated theproscription against proceeding “further with the solicitation or withthe award of the contract”? The author would assume thatexecution and performance of the contract post-award would beoutside the scope of the automatic stay. This ends up in the author’smind as being only of passing interest because the stay was notinvoked.

e. The Decision puzzled over a legal reason to find that an award for 2pieces of equipment when only one was solicited was improper,drifting off into discussions of indefinite quantity contracts (thiswasn’t one) and general policy statements.

(1) The author considers the discussion to be needlesslyfloundering and off-base on this issue. The governmentsimply cannot enter into a contract (or issue a purchaseorder) to buy something it did not solicit. “[A]ll territorialcontracts shall be awarded by” one of the approved methodsof source selection. (5 GCA § 5210(a).) The contract shallbe awarded to the lowest responsible bidder whose bidmeets the requirements set forth in the IFB. (5 GCA §5211(g).) The IFB includes the “purchase description” (5GCA § 5211(b)), which describes “the supplies, services orconstruction to be purchased” (5 GCA § 5201(d). Here, thesolicitation plainly was for one piece of equipment, not two. There was no authority to purchase the second one, which isthe tortuous result the Decision correctly reached.

f. For the author, the most significant holding of this Decision is itsstatement that agencies cannot evaluate an IFB using the evaluationprocess (negotiations) and standards (selecting “best qualified” ratherthan lowest responsive bid) of an RFP, citing the Fleet ServicesGuam Supreme Court Decision discussed above. As it was, the bestqualified was also the low bidder in this case, so that was not anissue, but the Decision did refute the use of negotiations in this case.


g. The result, correctly reached, was to award the IFB for one piece ofequipment and require a new solicitation if the agency remainedintent on purchasing a second piece of equipment.

11. OPA-PA-08-009, In the Appeal of Captain, Hutapea and Associates (vsGHURA)

a. This involved a factual dispute over the requirements of an RFP. TheAppellant argued that it should have been selected as the “bestofferor” because it exclusively had a necessary data base ofinformation not available to the other offeror.

b. The take-away from this decision is that the Public Auditor isdeferential to a determination of the agency’s judgment of thejudgmental factors in an RFP, such as the comparative experienceand past performance of the competing offerors and the content oftheir competing methodologies, absent clear and convincingevidence of bias or other partial treatment. Such a standard makes itincumbent on appellants to produce hard evidence rather than relymore on vague statements of bias or other paranoia to entice thePublic Auditor to scrutinize the decision makers as opposed to thedecision itself.

c. Note, in comparison to subjective judgmental evaluations of RFPs,in evaluating an IFB, where price consideration is concerned,“[t]hose criteria that will affect the bid price and be considered inevaluation for award shall be objectively measurable.” (5 GCA §5211(e).).

12. OPA-PA-08-008, In the Appeal of Latte Treatment Center, Inc. (vs DMHSA)

a. This is the most recent Decision by OPA since this paper lastpublished, decided February 26, 2009. This was an appeal of anRFP issued for professional care services for children with severeemotional conditions and related such. The Decision cancelled theRFP altogether, principally because the agency failed to properlydocument the procurement record. The author supports the result,but respectfully quibbles with some of the statements made inreaching the Decision.

b. The agency argued the Appellant could not be an “aggrievedofferor” because it substantively lacked an essential professionallicense to perform the work, therefor the OPA lacked jurisdiction tohear the appeal. Note that this is a requirement for binging theprotest in the first instance, and not a direct requirement for bringingan appeal. More substantively, though, this argument puts the


carabao before the cart because that was a contested issue, and theDecision correctly found Appellant was an “aggrieved offeror”because the Appellant alleged other “violations of Guam’sProcurement Laws and Regulations relating to DMHSA’s solicitationand award”.

(1) But in doing so, the statements were made in the Decisionthat “a losing bidder is an aggrieved bidder”, and, “LTC is anaggrieved offeror because it was not selected for the award.”The author is concerned those statements venture too farafield. All that is required to bring an appeal is that thebidder “may be” aggrieved. If all losing bidders wereaggrieved by definition, as the statements suggest, then everyaward is subject to appeal even if the bidder may not be“aggrieved” by any error or wrongdoing. In Latte TreatmentCenter, the Appellant raised several issues by which it maybe aggrieved, and it was on that basis that the OPA hadjurisdiction, not on the basis simply that the Appellant isaggrieved because it was not selected.

(2) If a rule is recognized that notice of non-selection means theunselected bidders are aggrieved simply by reason of notbeing selected, regardless of knowledge of NO facts bywhich they may be aggrieved by error or wrongdoing, thenEVERY losing bidder will be OBLIGED to file a protest whenthe award to another bidder is announced to protect the 14day filing deadline, even if, at that time, they don’t know anyfacts of error or wrongdoing by which they may beaggrieved. That would imperil the whole appeal process,and cannot be the meaning or intent of the law andregulations.

(3) Bear in mind that delay in bringing a protest until after factsof aggrievement are discovered does not mean theprocurement process grinds to a halt. First, the automaticstay can be lifted. Second, the contract, if already awarded,is not subject to any automatic stay, nor is any awardnecessarily cancelled by the protest because it can beaffirmed even if the person awarded the contract engaged infraud. These matters have been discussed above.

(4) This discussion is not intended to be idle nit-picking. Thisfine point bears on the timing of when the period for filingprotests begins. The author contested that exact point beforethe Public Auditor in the CNMI (which differs only inrequiring a 10 day protest filing period compared to Guam’s14 day period). There, the agency held that the Protestant’s


protest must have been filed within 10 days of receipt ofnotice of intent to award to another bidder, even though theProtestant did not have, and could not have, any knowledge,at that time, of facts giving rise to the Appellant’s claim tobeing aggrieved. The Protestant discovered, after documentswere later disclosed by the agency, facts indicating it mayhave been aggrieved by alleged errors in the evaluationprocess, and filed its protest within 10 days of that discovery.

(a) In its Final Decision and Decision on Request forReconsideration in Appeal of Island BusinessSystems & Supplies, Appeal No. BP-A057, the CNMIOPA ruled that notice of award to another issufficient to trigger the protest filing period,regardless whether the Protestor had knowledge offacts by which it may be aggrieved.

i) The Public Auditor acknowledged Appellanthad no knowledge, and could not have hadknowledge, of the facts by which it may havebeen aggrieved until such documents wererevealed (“it is possible that IBSS did notknow how it was aggrieved”), butnevertheless said “it was aggrieved”on theday it received notice of award to anotherbidder., without more.

ii) The CNMI Public Auditor, in his decision onreconsideration, supported this rule bysaying, “every rejected proposer couldmerely bide its time until it found some basisupon which to protest an award, whichwould wreak havoc on the procurementprocess and the need for finality, issuance ofa valid contract, and the products or servicesthat are the subject of the contract.”

iii) The upshot seems to be, in the CNMI, if youdo not win the award, you must protest evenbefore you have “found some basis uponwhich to protest an award”. As the opinionstated, on the date the Appellant was notifiedthat another bidder got the award, it may nothave known how it was aggrieved, but “itcertainly knew that it was aggrieved.”


(b) The CNMI regulation (NMIAC § 70-30.3-501(a)(1)),substantively identical to Guam, only allows proteststo be filed by parties “who may be aggrieved inconnection with” the bid, and the protest must befiled “within ten days after such aggrieved personknows or should have known of the facts giving risethereto”, which, to the author would mean theparties cannot protest until they have knowledge orshould have knowledge of a factual basis for theprotest. But that would not appear to be the CNMIcase, based on this decision, which now seems torequire rejected bidders and proposers to protest first,in order to secure their filing deadline, and seek tofind a basis for the protest afterwards.

(c) In the CNMI case, the Public Auditor’s decision seemed to turn on his concern that the Appellantspent too much time (24 days – 16 working days inthe finding of the Public Auditor) puzzling over thenotice of award before it requested documents fromthe agency supporting the proposal evaluation andaward.

i) The Public Auditor said such a request fordocuments may have “possibly” stayed thetime to file a protest, though there is noprovision in the regulation imposing such astay nor discretion granted to allow it. Filingdeadlines are generally treated strictly, asdiscussed above.

ii) The Public Auditor overlooked the fact that,by the time the agency actually supplied theinformation requested, it would have beentoo late to file a protest anyway if the filingperiod was triggered by mere notice ofaward. He did not provide any authority toprovide any hope that such a request mighthave “possibly” stayed the filing deadline.

(d) Note that Guam regulations do not specify any timelimit for making a Request for Reasons, and CNMIregulations do not make provision for any suchRequest at all.

(e) Note that the CNMI regulations do not have theexplicit sanctions for filing frivolous or disruptive


protests that Guam does (2 GAR § 9101(g)(2)), sofiling protests when there is no knowledge of thefacts by which a person may be aggrieved may notbe so perilous a proposition in the CNMI. Butbeware the CNMI does have the broad right to disbaror suspend for any cause determined “to be soserious and compelling as to affect responsibility as agovernment contractor” (NMIAC § 70-30.3-760(b)(5)). Presumably, following the PublicAuditor’s advice that a bidder is, ipso facto,aggrieved when notified of award to another wouldconstitute a defense to any sanction for filingfactually baseless protests in the CNMI; but, bewareof the dilemma.

(f) Finally, note that the CNMI procurement law andregulations are similar in general principal to Guamprocurement, but differ significantly in technicaldetail. Discussion of CNMI procurement law andregulation is beyond the scope of this paper.

13. OPA-PA-09-002, In the Appeal of Teal Pacific, LLC (vs GPSS)

a. As with its prior appeal (OPA-PA-08-010), Appellant’s appeal wasdismissed when the Public Auditor recused herself, at the request ofAppellant, for the stated reasons that she and her husband have“doctor/patient relationships” with one principal of the Appellant,and she and her husband also have had “a casual acquaintance”with another principal, notwithstanding the Public Auditor’s beliefthose relationships would not prejudice her actions in the matter.


INDEX OF PERTINENT DECISIONS, APPEALS and AUTHORITIES

Appeal of Island Business Systems & Supplies (v NMC), CNMI OPA, Appeal No. BP-A057,Decision on Request for Reconsideration dated March 11, 2009. . . . . . . . . . . . . . . . . . . . . 66, 114

Competitive Negotiation, Second Edition, Ralph C. Nash, Jr., John Cibinic, Jr., and Karen R.O’Brien, The George Washington University, Law School Government Contracts Program.. 11, 12,

29, 34, 43, 46

Executive Order 2000-25, Relative to Obtaining On-Island Professional Consulting, Education andTraining Services before Off-Island Professional Consulting, Education and Training Services... . 13,

17

Fleet Services, Inc. v. Dept. of Administration, 2006 Guam 6. . . . . . . . . . . . . . 22, 42, 45, 49, 111

Formation of Government Contracts, Third Edition, John Cibinic, Jr., and Ralph C. Nash, Jr., CCH/Wolters Kluwer, The George Washington University Law School Government Contracts Program.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35, 68, 107

Guam Imaging Consultants, Inc., v. Guam Memorial Hospital Authority, 2004 Guam 15 . . 17, 23,66, 74

In the Appeal of Advance Management, Inc., OPA-PA-07-008.. . . . . . . . . . . . . . . . . . . . . . 41, 107

In the Appeal of Captain, Hutapea and Associates, OPA-PA-08-009. . . . . . . . . . . . . . . . . . . . . 112

In the Appeal of Dick Pacific Construction Company, Ltd., OPA-PA-07-007. . . . . . . . . . . . 34, 106

In the Appeal of Emission Technologies, Inc., OPA-PA-07-002. . . . . . . . . . . . . . . . . . . 12, 34, 105

In the Appeal of Far East Equipment Company, LLC, OPA-PA-07-010. . . . . . . . . . . . . . . . . . . . 109

In the Appeal of Far East Equipment Company, LLC, OPA-PA-08-001. . . . . . . . . . . . . . . . . . . . . 85

In the Appeal of Far East Equipment Company, LLC, OPA-PA-06-002. . . . . . . . . . . . . . . . . . . . 104

In the Appeal of Great West Retirement Services, OPA-PA-07-006. . . . . . . . . . . . . . . . . . . 47, 106


In the Appeal of Guam Publications, Inc., OPA-PA-08-007 .. . . . 20, 29, 36, 58, 63, 65, 71, 73, 94,95

In the Appeal of J&G Construction, OPA-PA-07-005. . . . . . . . . . . . . . . 29, 32, 34, 36, 75, 79, 106

In the Appeal of JMI Medical Systems, Inc., OPA-PO-07-011.. . . . . . . . . . . . . . . . . . . . . . . 28, 110

In the Appeal of Latte Treatment Center, Inc., OPA-PA-08-008.. . 9, 10, 32, 37, 66, 69, 80, 83, 93,112

In the Appeal of Mega United Corp., OPA-PA-09-001. . . . . . . . . . . . . . . . . . . . . . . . . . . 65, 75, 82

In the Appeal of O&M Energy, S.A., OPA-PA-08-004. . . . . . . . . . . . . . . . . . . . . . . . . . . 31, 78, 110

In the Appeal of Oceania Collection Services, OPA-PA-08-006. . . . . . . . . . . . . . . . . . . . . . . . . . 45

In the Appeal of Pacific Security Alarm, Inc., OPA-PA-07-009.. . . . . . . . . . . . . . . . . . . . . . 27, 109

In the Appeal of RadioCom, OPA-PA-06-003. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104

In the Appeal of Teal Pacific LLC, OPA-PA-08-010.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 76, 85, 116

In the Appeal of Teal Pacific, LLC, OPA-PA-09-002. . . . . . . . . . . . . . . . . . . . . . 13, 75, 76, 85, 116

In the Appeal of the Debarment of Rex International, Inc., OPA-PA-06-001. . . . . . . . . . . . . . . 104

In the Appeal of Town House Dept. Stores, Inc. dba Island Business Systems and Supplies [IBSS vsGSA], OPA-PA-08-012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18, 55, 67, 73

In the Appeal of Town House Dept. Stores, Inc., dba Island Business Systems and Supplies [IBSS vsGPSS (2)], OPA-PA-08-011. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50, 55, 57, 66, 76, 95, 103

In the Appeal of Town House Dept. Stores, Inc., dba Island Business Systems and Supplies [IBSS vsGPSS (1)], OPA-PA-08-003. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72, 75, 78

In the Appeal of Town House Dept. Stores, Inc., dba Island Business Systems and Supplies [IBSS vsUOG], OPA-PA-06-004.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75

J&B Modern Tech v. GIAA, Guam Superior Court, CV 0732-06 (Findings of Fact and Conclusions ofLaw, Elizabeth Barrett-Anderson, June 25, 2007). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26, 27, 80

L.P. Ganacias Enterprises, Inc., dba Radiocom vs. GIAA and Guam Cell Communications, GuamSuperior Court, CV 1787-00 (Decision and Order, Joaquin V. E. Manibusan, Jr., November 13,2000). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23, 28, 56, 67, 68, 74, 79

Pacific Security Alarm, Inc. v DPW, Guam Superior Court CV 0591 - 05 (Decision and Order,Stephen Unpingco, August 14, 2006). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76, 77


Pacific Security Alarm, Inc., v. GPA, Guam Superior Court, CV 1304-04 (Findings of Fact andConclusions of Law, Arthur R. Barcinas, August 15, 2006). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109

Sumitomo Construction, Co., vs. Government of Guam, Guam Superior Court CV 1589-99(Decision and Order, Michael J. Bordallo, May 18, 2000). . . . . . . . . . . . . . . . . . . . . . . . . . 97, 101

TRC Environmental Corporation vs. Office of the Public Auditor, Guam Superior Court SP 160-07(Decision and Order on Petition for Writ of Mandate, Alberto C. Lamorena III, November 21, 2008).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13, 34, 73, 75, 76, 103, 105