When to Call Legal Counsel

1. When to Call Legal Counsel Presented by: Julie M. Whitlock, AAG, VCO Technology & Procurement Law Section March 13, 2008

2. Purpose of Today’s Session • Help determine when you might benefit from getting the advice of a legal expert • Identify acts of legal significance in contract formation and administration • Focus on typical practices that can have legal ramifications Virginia Association of Governmental Purchasing

3. The Lawyer’s Role • Lawyer: • Person admitted to practice law in his respective state and authorized to perform both civil and criminal legal functions for clients, including drafting of legal documents, giving of legal advice and representation before courts, administrative agencies, boards, etc. Virginia Association of Governmental Purchasing

4. The Lawyer’s Role • Counselor at Law: • One who provides advice and assistance to another in regard to a legal matter, proposed line of conduct, claim or contention. Virginia Association of Governmental Purchasing

5. Attorney-Client Communications • Protected from disclosure by: • the attorney-client privilege from the law of evidence • the rule of confidentiality from the rules of professional ethics • Also excluded from disclosure requirements under the Virginia Freedom of Information Act. See Va. Code §§ 2.2-3705.1(2) & (3) and 2.2-3711(7). Virginia Association of Governmental Purchasing

6. Waiver of Privilege • The client may choose to waive expectation of confidentiality and to permit disclosure under FOIA. • Disclosure of legal advice to third parties constitutes a waiver of privilege in regard to the party receiving the information and anyone else requesting it. The privilege is also waived for all related information. • Third parties include contractors and other non-employees who may be working on behalf of agency. Virginia Association of Governmental Purchasing

7. Limitations on the Lawyer’s Role • Your lawyer’s role is to: • Provide advice • Identify options • Assist in assessment of risks Clients make decisions on how to implement advice. • Your lawyer’s role is not to: • Tell you what to do • Approve your decision • Play procurement police Virginia Association of Governmental Purchasing

8. Recurring Theme • Maximize your options – call early! Virginia Association of Governmental Purchasing

9. Who ya gonna call? • State agency → assigned counsel at OAG • Political subdivisions → OAG oroutside counsel • Localities → county or city attorney or outside counsel Virginia Association of Governmental Purchasing

10. The Procurement Process

11. Choice of Process • Seek competition under Procurement Act, PPTA, or PPEA • Purchase from governmental source (no competition required) • Purchase from existing statewide contract • Purchase from contract established by another agency Virginia Association of Governmental Purchasing

12. Choice of Source • Some foundations, museums, etc. may or may not be governmental sources • If using another’s contract, read the contract and ensure that it provides the services you need on terms to which you are agreeable (and that it properly authorizes you to use it) Virginia Association of Governmental Purchasing

13. Sources • There is no such thing as “eVA certified” • Know thy vendor’s legal name Virginia Association of Governmental Purchasing

14. GSA Contracts • The Procurement Act allows purchases from federal contracts if: • Congress has authorized it • It is consistent with federal regulations • The terms of the particular contract permit it • The appropriate approval has been received Virginia Association of Governmental Purchasing

15. Laying the Foundation • When procuring through competition: • Clearly identify mandatories vs. desirables • Clearly identify evaluation criteria • Set out submission instructions • Set out process of evaluation and method of award Virginia Association of Governmental Purchasing

16. Receiving Responses Whenever the receipt of responses does not completely and precisely match what the solicitation required, or where the solicitation was not clear as to receipt, seek legal advice. Virginia Association of Governmental Purchasing

17. What about attachments? • A invitation for bids stated that each bidder “shall” submit certain documents, and went on to say that failure to follow these requirements would make the bid nonresponsive. • Norfolk Circuit Court held that this requirement was clear and unambiguous, and the bidder’s failure to submit the documents with his bid was not an informality. Virginia Association of Governmental Purchasing

18. Pop Quiz • IFB says that bids would be opened at 2pm on due date. At 1:50, a bidder arrives in the bid opening room with his sealed bid. The contract officer doing the bid opening does not arrive in the room until 2-3 minutes after 2:00. Can the bid be accepted? Virginia Association of Governmental Purchasing

19. Answer Due date and time are NOT informalities that can be waived Virginia Association of Governmental Purchasing

20. Responses –Terms • Invitation for Bids issued. Specs include a three-year off-site warranty. • Bidder agrees to terms, but includes a copy of his standard warranty. That warranty includes a three year off-site limited warranty. Bidder’s responsibility is limited to repair or replacement. • When the goods break down, will the agency be able to sue to recover its monetary damages? Virginia Association of Governmental Purchasing

21. Negotiations • IFBs cannot be negotiated • If a bidder takes exception or attempts to add his own terms, you must determine whether such exception is allowed. If not, the bid is non-responsive and you cannot negotiate with the bidder to remove his exception. • Negotiations on RFPs must be complete prior to notice of award or intent to award – if not, the protest period will not begin until there is a completed contract which can be reviewed by potential protesters Virginia Association of Governmental Purchasing

22. Non-negotiable Terms • Any term whereby the Commonwealth provides indemnity to the contractor • Any term that is in conflict with the Procurement Act or governing regulations (such as a term that requires binding arbitration) • Any term whereby the Commonwealth waives its sovereignty – for example, a term requiring the contract to be governed by the laws of another state Virginia Association of Governmental Purchasing

23. Terms - Limitation of Liability • LIMITATION OF LIABILITY: To the maximum extent permitted by applicable law, the contractor’s liability under this contract for loss or damages to government property caused by use of any defective or deficient supplies, products, equipment and/or services delivered under this contract shall not exceed the greater of $______________ or ____________ times the amount of money paid to the contractor under this contract during the twelve month period preceding the event or circumstance giving rise to such liability. The contractor will not be liable under this contract for any indirect, incidental, special or consequential damages, or damages from loss of profits, revenue, data or use of the supplies, equipment and/or services delivered under this contract. The above limitation of liability is per incident. The limitation and exclusion of damages in the foregoing sentences will not apply, however, to liability arising from: (a) personal injury or death; (b) defect or deficiency caused by willful misconduct or negligence on the part of the contractor; or (c) circumstances where the contract expressly provides a right to damages, indemnification or reimbursement. Virginia Association of Governmental Purchasing

24. Terms – Limitation of Liability • LIMITATION OF LIABILITY: …, the contractor’s liability … shall not exceed the greater of $______________ or ____________ times the amount of money paid to the contractor under this contract during the twelve month period preceding the event or circumstance giving rise to such liability. • The contractor will not be liable … for any indirect, incidental, special or consequential damages, or damages from loss of profits, revenue, data or use of the supplies, equipment and/or services delivered …. • The limitation …will not apply, however, to …: (a) personal injury or death; (b) defect or deficiency caused by willful misconduct or negligence on the part of the contractor; or (c) circumstances where the contract expressly provides a right to damages, indemnification or reimbursement. Virginia Association of Governmental Purchasing

25. Terms and Legal Advice • You may find legal advice helpful where: • You are unable to get the other side to negotiate out the terms you do not have authority to alter or agree to • You are presented with a term that is unfamiliar • You have any question about any term Virginia Association of Governmental Purchasing

26. Preparing to Award the Contract

27. Report Finds DHS Lax on Contracting Procedures • Private consultants hired by the Department of Homeland Security have found widespread problems with its contracting operation, including nearly three dozen contract files that could not be located. • Files that could be found often lacked basic documentation required under federal rules, such as evidence that the department negotiated the best prices for taxpayers, according to a copy of the consultants' report obtained by The Washington Post. • By Robert O’Harrow Jr. and Scott Higham • November 22, 2006; Page A01 Virginia Association of Governmental Purchasing

28. The File • The Procurement Act allows public inspection (and copying) of all records relating to the procurement transaction • The APSPM requires that the file contain the “who, what, where, when, and why”  this is helpful for purposes of contract administration, but may not be fully responsive to a request for all records related to the procurement Virginia Association of Governmental Purchasing

29. The File • If you receive a request for documents, that request should be treated as a FOIA request and you should respond accordingly. Keep a record of what is produced to assist you should you receive a subsequent request or discover additional documents. Virginia Association of Governmental Purchasing

30. Documents Protected from Inspection • The policy of FOIA is that all records are open to inspection unless an exemption exists to say that a particular record is not • Specific exemptions exist for: • Budget estimates • Vendor proprietary information, but only to the extent that the vendor has complied with the statutory requirements for invoking this protection Virginia Association of Governmental Purchasing

31. Documents Protected from Inspection • If there is any question as to what • should be produced or what authority • exists for not producing, contact your legal counsel Virginia Association of Governmental Purchasing

32. Confidentiality Agreements • Be careful when agreeing to keep information confidential -- • You could find yourself obligated under FOIA to disclose information that you have contractually agreed to protect. FOIA will trump, and you may find yourself in breach of the contract. Virginia Association of Governmental Purchasing

33. Destruction of Records • Before destroying any records related to the procurement, you should be familiar with the records retention policies issued by the Library of Virginia and any specific schedules for your agency. • This includes electronic records. Virginia Association of Governmental Purchasing

34. The Contract

35. Pop QuizWhich of the following is a contract? • A government employee with no purchasing authority orders goods over the phone • A contract officer emails his buddy without following the required procurement process and tells the buddy to have his company send over $10,000 worth of widgets • A government employee with no purchasing authority clicks “I Agree” on a website just prior to downloading software Virginia Association of Governmental Purchasing

36. Pop QuizAnswer • Employee with no purchasing authority orders goods over the phone • NO CONTRACT – though individual may be personally liable • Contract officer emailing his buddy without following the required procurement process and tells the buddy to have his company send over $10,000 worth of widgets • CONTRACT • A government employee with no purchasing authority clicks “I Agree” on a website just prior to downloading software • NO CONTRACT Virginia Association of Governmental Purchasing

37. Procurement Authority • Make sure the person entering into the contract has the proper delegated authority (typically written delegation is required) and that the money has been appropriated • Without authority, a contract is never formed and the agency will not be able to pay for the goods or services (though the person who enters into the contract may be on the hook personally to the vendor) Virginia Association of Governmental Purchasing

38. Pop Quiz • You receive an invoice for goods/services that have not been ordered properly. Is payment authorized? Virginia Association of Governmental Purchasing

39. Procurement Authority • “King's Villa is in the unfortunate position of having dealt in good faith with a public servant who exceeded the bounds of his authority. … • For it is true that where, as here, a contract was prepared by the County Administrator and approved as to form by the County Attorney, a citizen might easily conclude, without further inquiry or investigation, that every part of the contract was legal and binding and could be relied upon. • However, we have cautioned in several cases that those who deal with public officials must, at their peril, take cognizance of their power and its limits. … “ Virginia Association of Governmental Purchasing

40. Procurement Authority • “… Were we to rule in favor of King's Villa we would … be permitting the judgment of one official to supplant the collective wisdom of the elected governing body whom the people have chosen to wield the power here in dispute. Instead of having rule by the Board of Supervisors we would be allowing rule by one man, who in the final analysis is but an employee of the Board. Such a result is unacceptable under our form of government. “ • From the Virginia Supreme Court’s opinion in County of York v. King's Villa, 226 Va. 447, 309 S.E.2d 332 (1983) Virginia Association of Governmental Purchasing

41. Forms of contract • Oral agreement • Email • Letter • Document signed by two parties • Purchase Order • “click agreement”/shrinkwrap Virginia Association of Governmental Purchasing

42. What makes up the contract? • The contract consists of what it says it consists of • Single document or many • RFP plus the proposal • IFB plus the bid • All documents incorporated by reference • Vendors Manual • Documents on the web • Purchase orders Virginia Association of Governmental Purchasing

43. Protests

44. Anticipating a Protest • Using a Notice of Intent to Award: • Preserves the agency’s options in response to a protest • Limits liability to the successful vendor • Once a NOIA is posted, no further negotiations shall be conducted. APSPM § 7.4. • If a protest is filed, the automatic stay provisions of Va. Code §2.2-4362 are triggered. Virginia Association of Governmental Purchasing

45. Anticipating a Protest • If you anticipate a protest, call legal counsel PRIOR to posting the award If you wait until after the protest is received, you will only have 10 days to get your counsel involved and up to speed. Virginia Association of Governmental Purchasing

46. Protest Period • The 10-day period for protests begins from the date of award or announcement of the decision to award. If the relevant documents are not available for inspection upon award, the 10-day period does not start until they are available. • If you continue to negotiate after posting an award, the 10-day period has not yet started. Virginia Association of Governmental Purchasing

47. Protests • If there is any question whether a protest is timely or how to respond to a request for documents… Virginia Association of Governmental Purchasing

48. Decisions on Protests • Where award has been made and performance begun, if the public body finds that the decision was arbitrary and capricious then the public body may declare the contract void • Requires a finding that voiding the contract is in the best interest of the public • Contractor shall be compensated for cost of performance Virginia Association of Governmental Purchasing

49. Decisions on Protests • Consider whether it is likely that the protest decision may be appealed. If you think it will be, it may be a good idea to have counsel review your draft response to the protest. Virginia Association of Governmental Purchasing

50. If you receive notice of an appeal or a lawsuit – Call legal counsel immediately! Appeals of Protest Decisions Virginia Association of Governmental Purchasing