Traditionally, public agencies have awarded construction contracts via the “lowest responsible bidder” procurement method, where bidders submit sealed bids and contracts are awarded to the lowest responsible bidder. However, a number of governmental entities have started to award contracts through “best value” procurement, which looks at factors other than price. Quality, experience, and expertise of the bidders also are relevant considerations when selecting contractors or vendors under a “best value” procurement format.
Following the trend, on May 16, 2017, Philadelphians approved a ballot measure that amended the City’s Home Rule Charter to allow the City to award certain contracts based on the “best value” standard, in addition to the “lowest responsible bidder” approach. Shortly thereafter, on July 27, 2017, the City issued regulations governing the award of contracts based on the “best value” method.
Under the regulations, the City’s Procurement Commissioner can permit a City contract to be awarded pursuant to the “best value” standard only after the City Department has made a detailed recommendation to the Procurement Commissioner. This recommendation must include a relative weight for price scoring and for technical (non-price) scoring to be used in evaluating bids. The minimum price scoring must be at least 30% of the total evaluation. The minimum technical scoring must be at least 50% of the total evaluation.
Technical scoring will be based on some or all of the following criteria:
- Qualities of the goods or services proposed by the bidder;
- The bidder’s technical, administrative, and financial experience and capacity;
- The bidder’s management plan and proposed scheduled;
- The bidder’s experience in providing similar products and/or services;
- The experience and capacity of bidder’s staff and/or subcontractors;
- The bidder’s diversity and inclusion plan;
- The bidder’s past performance on other contracts, including other City contracts;
- The bidder’s safety history and plan;
- Benefits to the City of supporting growth of new or small businesses, including those owned by minority or disabled persons or women;
- Anticipated job creation, particularly in low and moderate income City neighborhoods;
- The bidder’s certification as a Local Business Enterprise (LBE); and
- Additional economic, environmental, and social benefits of the proposed goods or services that support the City Department’s objections.
If the Procurement Commissioner approves the “best value” standard, a selection committee must be formed. The selection committee shall be comprised of diverse individuals having familiarity of the goods and services proposed and appropriate technical, financial, or other experience for evaluating the cost and qualitative factors. The selection committee must evaluate each proposal based on the price and technical scoring criteria. Then, a representative from the Procurement Department will tally the scores, and the selection committee will generally recommend the bidder receiving the highest overall score to the Procurement Commissioner for either an award of a contract or for additional negotiations of price and other terms.
The City’s Procurement Department has indicated that, while the normal course of business will continue to be the “lowest responsible bidder” method, it will begin to roll out the City’s most complicated bids under the “best value” standard between December 2017 and March 2018.
So what should contractors do to increase their chances of being awarded a “best value” opportunity?
First, contractors should ensure that they are compliant with all disclosure requirements as set forth in Chapter 17-1400 of the Philadelphia Code. For example, when submitting a proposal for a “best value” opportunity, contractors must disclose any campaign contributions that they (or any consultant they hire to assist in obtaining the potential contract) made in the preceding two years to any political candidates or incumbents running for any local Philadelphia or Pennsylvania state office. As a result, contractors should begin to keep track of any disclosable campaign contributions and any other required disclosures to ensure that they are prepared to fulfill the disclosure requirements at the time of application for a “best value” opportunity.
Second, when bidding on “best value” procurements, contractors need to think strategically and be mindful of both the price and technical scoring parameters. Having the lowest price or exceeding the request for proposal (RFP) requirements may not be enough. Often times, the government will award a “best value” contract to a higher priced bidder because the government believes that the higher priced bidder offers a better value to the government based on its technical scoring. As such, it is important to remember not to become complacent when bidding on “best value” opportunities. Before finalizing their bids, contractors must review each RFP’s baseline requirements for categories where they can add value and then highlight those benefits in their proposals.
Whether bidding on local opportunities in Philadelphia or large-scale federal construction projects, the procurement process and its requirements vary with each jurisdiction. It is important that contractors familiarize themselves with the bidding requirements of each jurisdiction and each RFP. As always, contractors who are unsure of their obligations or remedies when bidding on a public contract should consult legal counsel.
Ed Seglias is the Vice President of Cohen Seglias as well as a shareholder and a member of the Board of Directors. Ed is a partner in the Firm’s Construction Group, and concentrates his practice in construction law and commercial litigation.
Zachary D. Sanders is an associate in the Firm’s Construction Group and concentrates his practice on construction litigation in both state and federal courts and alternative dispute resolution proceedings.