7.4 Methods of Procurement

• Library: Virginia Construction Law Deskbook (Virginia CLE) (2019 Ed.)

7.4 METHODS OF PROCUREMENT

7.401 Governing Law. Generally, all public contracts with nongovernmental contractors for the purchase or lease of goods, or for the purchase of services, insurance, or construction, must be awarded using competitive sealed bidding or competitive negotiation as provided in the VPPA, unless otherwise authorized by law. ⁶² A "public body" is defined as "any legislative, executive or judicial body, agency, office, department, authority, post, commission, committee, institution, board or political

[Page 209]

subdivision created by law to exercise some sovereign power or to perform some governmental duty, and empowered by law to undertake the activities described in" the VPPA, and any metropolitan planning organization or planning district commission that operates exclusively in Virginia. ⁶³ "Construction" is defined very broadly as "building, altering, repairing, improving or demolishing any structure, building or highway, and any draining, dredging, excavation, grading, or similar work upon real property." ⁶⁴

The stated intent of the VPPA is to allow a public body great flexibility and focus when fashioning bids to contract for its specific needs. ⁶⁵ Despite the express broad flexibility allotted by the VPPA, some restrictions exist when the procurement is for a construction contract. For example, public bodies may not consider "best value concepts" when procuring construction services. ⁶⁶ The act also allows public bodies to give preferential treatment to contractors who are citizens of the Commonwealth as well as contractors who use Virginia products in fulfilling the contract. ⁶⁷

For public construction contracts the VPPA prescribes several methods of procurement: (1) competitive sealed bidding; (2) competitive negotiation; (3) sole source; (4) emergency; (5) small purchase procedures; (6) cooperative procurement; and (7) job order contracting. A public contract that is not procured in a manner prescribed by the VPPA is ultra vires, void ab initio, and unenforceable, even when the contractor has already performed the work. ⁶⁸ These methods are discussed below.

[Page 210]

7.402 Competitive Sealed Bidding. Competitive sealed bidding is required for most public construction projects. ⁶⁹ When using this method of procurement, the public body issues an "Invitation to Bid" (ITB), which states the needs of the government, the specifications and terms and conditions of the contract, and any required qualifications of the contractor. ⁷⁰ Competitive sealed bidding can also be done using a two-step bidding process. In the first step, an ITB solicits unpriced offers; then, a second ITB is issued to only those bidders who qualified under the criteria in the first ITB. ⁷¹ Public bodies are also permitted to solicit bids directly from potential contractors who have been prequalified for the type of services or supplies that are the subject of the bid. ⁷²

The public body must issue public notice of the ITB at least 10 days before the date the public body will receive bids. Giving public notice by posting the ITB on the Virginia Department of General Services' central electronic procurement website (eVA) and other appropriate websites is required for state public bodies and also for local public bodies. ⁷³ Additionally, public bodies may publish notice of the ITB in a newspaper of general circulation. ⁷⁴ At the date and time specified in the ITB, the bids are publicly opened and announced, after which the bids are evaluated based upon the requirements stated in the ITB and a contract is awarded to the lowest responsive and responsible bidder. ⁷⁵

To avoid rejection, bidders must submit bids that are responsive to the requirements in the ITB, and ensure that their bids are actually received on or before the submission deadline. ⁷⁶ Additionally, contractors must be

[Page 211]

wary of their performance of any awarded public contract. Any contractor who is deemed to have performed unsatisfactorily for a public body can be debarred from obtaining future public contracts of specific types for a period of time. ⁷⁷

7.403 Competitive Negotiation.

A. In General. When competitive negotiation is used to procure construction or construction-related services, the contract is awarded to the offeror who has demonstrated during the negotiation process that it has the ability to meet the specified criteria and is best able to provide the services required. Whether competitive negotiation may be used and the procedure that must be followed depends on the type of services to be procured and the type of project involved.

B. Procurement of Construction Services. Public bodies may use competitive negotiation to procure construction services only for (i) fixed price, design-build, or construction management contracts or (ii) contracts for construction of highways and any draining, dredging, excavation, grading, or similar work on real property when there has been a written determination in advance that competitive sealed bidding is not practicable or not fiscally advantageous to the public. ⁷⁸

Competitive negotiation is a two-step process. In the first step, the public body issues a Request for Proposals (RFP) describing the public body's needs, specifying the factors or criteria that it will use to evaluate the proposals, and stating any applicable contractual terms and conditions, including any required unique capabilities and qualifications. ⁷⁹ As with ITBs, at least 10 days before the date set for receipt of proposals, public notice of the RFP must be posted on eVA and other appropriate websites by state public bodies and local public bodies that do not publish notice of the RFP in a newspaper of general circulation where the contract is to be performed. ⁸⁰ In

[Page 212]

addition to the electronic posting, state and local public bodies may also publish notice of the RFP in a newspaper of general circulation where the contract is to be performed. Public bodies are also permitted to solicit bids directly from potential contractors. ⁸¹ After the date set for receipt and opening of proposals, the public body must select two or more offerors with whom it will negotiate.

In the second step, the public body negotiates with the selected offerors to determine which offeror is fully qualified and best suited among all those submitting proposals on the basis of the factors or criteria stated in the RFP. Price must be one of the factors to be considered but need not be the sole determining factor. After negotiations are concluded, the public body may award the contract to the offeror that, in its opinion, has made the best proposal. ⁸² If the public body determines that only one offeror is fully qualified, or that one offeror is clearly more highly qualified than the others under consideration, then the public body may negotiate with and award the contract to that offeror. ⁸³ When the RFP provides for multiple awards, awards may be made to more than one offeror. ⁸⁴

C. Procurement of Professional Services. The Commonwealth must use competitive negotiation to award contracts for professional services, such as the services of architects or engineers. ⁸⁵ However, the procedure for procurement of professional services varies from the procedure for construction and nonprofessional services. As with other competitive negotiation procurements, the public body issues an RFP, stating in general terms what the public body seeks to procure, specifying the factors that will be used in evaluating the proposal, and noting any other applicable contractual terms and conditions, including any unique capabilities or qualifications that will be required of the contractor. The RFP may not, however, request that offerors furnish estimates of work-hours or costs for services. ⁸⁶ Public notice of the RFP must be given at least 10 days before the date set for receipt of

[Page 213]

proposals by posting the RFP on eVA. ⁸⁷ Public bodies are also permitted to publish the RFP in a newspaper of general circulation and to solicit bids directly from potential contractors. ⁸⁸

Following receipt of the proposals, the "discussion stage" begins. During this stage, the public body engages in individual discussions with two or more offerors that it deems to be fully qualified, responsible, suitable, and professionally competent to provide the required services, based on the submitted proposals. ⁸⁹ Multiple informal interviews are permitted. The public body should discuss, among other things, (i) the offerors' qualifications and performance data or staff expertise pertinent to the proposed project; (ii) any alternative concepts; (iii) nonbinding estimates of total project costs, including, but not limited to, life-cycle costing; and (iv) where appropriate, nonbinding estimates of price for services. ⁹⁰

At the conclusion of discussions, based on the evaluation factors published in the RFP and all information developed during the discussions, the public body must select in the order of preference two or more offerors whose professional qualifications and...