Breaking Free From “We’ve always done it that way” Virginia Association of Governmental Purchasing Lynchburg, Virginia March 22, 2007 Walter Erwin Stephanie Suter City of Lynchburg Thomas R. Folk Reed Smith LLP

2 City of Lynchburg revision of procurement ordinance, documents, procedures  Legal basis  Practical legal considerations

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

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

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

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

7 Alternative Policies and Procedures 1 - Who may have them? Who may not have them? Va. Code § A 10 & 11  - Who may have them - Counties, cities, towns, school boards  - Who may not have them- Anyone else, including authorities

8 2 - What may they cover?  - All but what in Va.Code § A 12. This includes claims procedures! 3 - What provisions of VPPA remain mandatory?  - Those specified in Va. Code § A 12, which include ones on use of competitive sealed bidding for construction, competitive negotiation for professional services, prequalification, brand names, employment discrimination, mistake-in-bid, retainage, no-damage-for-delay clauses, bonds, and ethics Alternative Policies and Procedures (cont’d – 1)

9 4 - What limiting principles apply for alternative policies and procedures in lieu of non-mandatory VPPA provisions?  ‘based on competitive principles”  “generally applicable to procurement of goods and services by such governing body and its agencies” Alternative Policies and Procedures (cont’d – 2)

10 Implementing Regulations Versus Alternative Policies and Procedures  “This chapter [i.e., the VPPA] may be implemented by ordinances, resolutions or regulations consistent with this chapter....”  Va. Code Section (emphasis added)

11  Implementing regulations and alternative policies and procedures are two different things.  Implementing regulations must be consistent with VPPA. Alternative policies and procedures need not be consistent with non-mandatory provisions of VPPA that they replace  May have both in same ordinance Implementing Regulations Versus Alternative Policies and Procedures

12 Use of Alternative Policies and Procedures—Claims  Claims fertile area for public bodies such as counties and school boards -- Can give better definition and tighter application of written notice of claims requirements -- Can require submission of claims earlier, rather than 60 days after final payment

13 An Example Where Alternative Policies and Procedures Made A Difference In Claims  Spotsylvania County adopted purchasing ordinance that required written notice of claim by contractor within 10 days of occurrence of event giving rise to claim  This differed from VPPA requirement at Va. Code § (formerly Va. Code § ) to give notice “at the time of occurrence”

14 Claims Example (continued)  Contractor on water plant project made 106 claims for over $8 million  Because of purchasing ordinance’s express 10-day time limit, it became easier for County to show lack of timely written notice  As a result, 93 of 106 claims were dismissed following a plea in bar hearing as untimely. MCI Contracting, Inc. v. Spotsylvania County, 62 Va. Cir. 375 (Spotsylvania Cir. Ct. 2003)

15 Claims Example (continued)  In contrast, if no expressly stated time period, law would imply a reasonable time, which is a question of fact  More difficult for public body to win on technical defense, such as lack of written notice, if issue becomes one of fact as to what is reasonable time

16 Additional Areas to Address in Alternative Policies and Procedures for Claims  What is a “claim”  What is manner in which written notice of intent to make a claim must be made  What is an “occurrence” that triggers the requirement for written notice

17 Alternative Policies and Procedures What is a “claim”  Not defined in VPAA  Not defined by Virginia Supreme Court  Define in alternative policies and procedures

18 What Satisfies Requirement That Contractor Given Written Notice of Intention to Make Claim?  Two 2001 Virginia Supreme Court decisions muddy the waters. Welding, Inc. v. Bland County Serv. Authority, 261 Va. 218 (2001); Dr. William E.S. Flory Small Business Development v. Commonwealth, 261 Va. 230 (2001)  If state with specificity in alternative policies and procedures, can restore clarity

19 What Is An “Occurrence”  Not defined in VPPA  2001 Welding, Inc., decision by Virginia Supreme Court tends to muddy waters  Public body benefits from clarity  If state with specificity in alternative policies and procedures, can restore clarity

20 Use of Alternative Policies and Procedures (continued)  OTHER FERTILE AREAS 1.Increase simplified small purchase procedures threshold to above $50,000 (e.g., $100,000) 2.Reduce remedies on nonresponsibility challenges 3.Tighten bid protest procedures

21 Adoption of Implementing Procedures for Mandatory Provisions  Public bodies should also consider implementing procedures for some mandatory VPPA provisions -- suspension and debarment -- prequalification -- automatic incorporation of required clauses into contracts

22 City of Lynchburg Revisions As A Case Study  Why?  What done?  How done?  Results?

23 Conclusion  Questions?  Discussion?