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									When to Call Legal                2008 Spring Conference



Counsel

  Presented by:
  Julie M. Whitlock, AAG, VCO
  Technology & Procurement Law Section


  March 13, 2008
Purpose of Today’s
Session                                                      2008 Spring Conference




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
The Lawyer’s Role                                            2008 Spring Conference




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
The Lawyer’s Role                                          2008 Spring Conference




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
Attorney-Client
Communications                                                2008 Spring Conference




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
Waiver of Privilege                                            2008 Spring Conference




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
Limitations on the
Lawyer’s Role                                                2008 Spring Conference




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
Recurring Theme                                         2008 Spring Conference




 Maximize your options – call early!




          Virginia Association of Governmental Purchasing
Who ya gonna call?                                       2008 Spring Conference




State agency → assigned counsel at OAG
Political subdivisions → OAG or outside
counsel
Localities → county or city attorney or
outside counsel




           Virginia Association of Governmental Purchasing
                     2008 Spring Conference



The Procurement Process
Choice of Process                                        2008 Spring Conference




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
Choice of Source                                          2008 Spring Conference




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
Sources                                                 2008 Spring Conference




 There is no such thing as “eVA
            certified”

  Know thy vendor’s legal name



          Virginia Association of Governmental Purchasing
GSA Contracts                                             2008 Spring Conference




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
Laying the Foundation                                    2008 Spring Conference




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
Receiving Responses                                      2008 Spring Conference




 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
What about
attachments?                                                2008 Spring Conference




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
Pop Quiz                                                  2008 Spring Conference




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
Answer
                                                        2008 Spring Conference




   Due date and time are NOT
informalities that can be waived




          Virginia Association of Governmental Purchasing
Responses –
Terms                                                       2008 Spring Conference




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
Negotiations                                                 2008 Spring Conference




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
Non-negotiable Terms                                      2008 Spring Conference




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
Terms - Limitation of
Liability                                                           2008 Spring Conference



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
Terms – Limitation of
Liability                                                       2008 Spring Conference



 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
Terms and Legal Advice                                   2008 Spring Conference




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
Preparing to Award the   2008 Spring Conference



Contract
Report Finds DHS Lax on
Contracting Procedures                                          2008 Spring Conference




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
The File                                                  2008 Spring Conference




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
The File                                                 2008 Spring Conference




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
Documents Protected
from Inspection                                           2008 Spring Conference




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
Documents Protected
from Inspection                                           2008 Spring Conference




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
Confidentiality
Agreements                                                2008 Spring Conference




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
Destruction of
Records                                                   2008 Spring Conference




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
               2008 Spring Conference



The Contract
Pop Quiz
Which of the following is
a contract?                                                 2008 Spring Conference




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
Pop Quiz
Answer                                                         2008 Spring Conference




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
Procurement
Authority                                                  2008 Spring Conference




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
Pop Quiz                                                 2008 Spring Conference




You receive an invoice for
goods/services that have not been
ordered properly. Is payment
authorized?




           Virginia Association of Governmental Purchasing
Procurement
Authority                                                    2008 Spring Conference



“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
Procurement
Authority                                                      2008 Spring Conference




“… 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
Forms of contract                                        2008 Spring Conference




Oral agreement
Email
Letter
Document signed by two parties
Purchase Order
“click agreement”/shrinkwrap


           Virginia Association of Governmental Purchasing
What makes up the
contract?                                                    2008 Spring Conference




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
           2008 Spring Conference



Protests
Anticipating a
Protest                                                    2008 Spring Conference




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
Anticipating a
Protest                                                    2008 Spring Conference




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
Protest Period                                              2008 Spring Conference




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
Protests                                                  2008 Spring Conference




If there is any question whether a
protest is timely or how to respond to a
request for documents…




            Virginia Association of Governmental Purchasing
Decisions on
Protests                                                   2008 Spring Conference




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
Decisions on
Protests                                                 2008 Spring Conference




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
Appeals of Protest
Decisions                                                2008 Spring Conference




If you receive notice of an appeal
or a lawsuit –

Call legal counsel
immediately!




           Virginia Association of Governmental Purchasing
                          2008 Spring Conference



Contract Administration
Contract
Administration                                            2008 Spring Conference




Goal:
  To ensure that the goods or services
   procured are furnished, received, invoiced
   and paid as specified in the contract.
Time Period:
   Administration begins as soon as the
   contract is awarded and continues through
   termination or expiration and beyond.


            Virginia Association of Governmental Purchasing
Administration
Scandals                                                       2008 Spring Conference




Wrong Glue used for Big Dig Ceiling
Morning Edition July 11, 2007

…But some say the NTSB report goes too easy on state
officials. Jack Lemley is a tunnel construction expert who
was hired by the Turnpike Authority to look into Big Dig
problems including massive water leaks. He says
organizational issues compromised the state’s oversight of
the massive project. “You have the state’s personnel co-
opted into the Bechtel/Parsons Brinckerhoff organization
and that line got blurred between the client and the
contractor.”


                 Virginia Association of Governmental Purchasing
Administration
Scandals                                                      2008 Spring Conference




Reconstructing a tragedy
The Boston Globe |   July 21, 2006


      Effectively, America's largest public works
project began with near-total reliance on Bechtel,
and weak oversight by the DPW. In 1997, nearly
seven years into engineering, the state changed
Bechtel's contract to create an “integrated project
management," blending personnel resources of the
DPW, the Turnpike Authority, and Bechtel, and
blurring Bechtel's legal accountability. This was
supposed to make oversight more efficient, but it
further weakened checks and balances.


                Virginia Association of Governmental Purchasing
Guiding Light                                             2008 Spring Conference




The first reference in answering
questions that arise during contract
administration should always be the
contract itself:
                WDTCS
      What Does The Contract Say?



            Virginia Association of Governmental Purchasing
Hypothetical: Where to
Send Payment                                               2008 Spring Conference




Huckleberry Finn contracts to provide
Government with white-washing services on a
monthly basis for 3 years. Performance
occurs without incident for 13 months until
Freddy in the Government’s finance office
receives communication from Tom Sawyer
stating that he has bought Huck’s accounts
receivable and payment of invoices under the
contract should now be made to Tom. In
month 14, government begins making
payments to Tom Sawyer.

             Virginia Association of Governmental Purchasing
Contractual Notices                                       2008 Spring Conference




Unless expressly allowed in the
contract a notice from a third party has
no legal effect
Contracts typically specify to whom
notices must be directed
Contracts may also specify manner for
providing notice
Notices have legal significance when
contractual provisions have been met
            Virginia Association of Governmental Purchasing
Contractual Notices                                       2008 Spring Conference




If you receive notice (whether compliant
with contract or not) of change in
financial condition of contractor or
threatening litigation, you may wish to
consult legal counsel to determine what
action, if any, should be taken to
protect your interests
  Bankruptcy notices, lawsuits, allegations
  of non-payment, etc
            Virginia Association of Governmental Purchasing
Hypothetical: Payment
to Third Party                                              2008 Spring Conference




Ramification of Paying Third Party -
   Does not relieve government of its contractual
   obligation to pay Huck Finn

This is also true where the third party is a
subcontractor. Even if you know that
subcontractor completed performance, you
cannot pay the subcontractor and expect that
to extinguish your obligation to the prime
contractor.



              Virginia Association of Governmental Purchasing
Modifications &
Change Orders                                           2008 Spring Conference




 Must be expressly permitted by the
       terms of the contract

                   WDTCS?




          Virginia Association of Governmental Purchasing
Modifications &
Change Orders                                             2008 Spring Conference




Limitations on scope of monetary
changes:
  Under Va. Code §2.2-4309A, fixed-price
  contracts may not be increased by more
  than the greater of 25% of the amount of
  the contract or $50,000 unless approved
  in advance in writing by the Governor or
  the political subdivision’s governing body
Conditions imposed by the contract –
WDTCS?

            Virginia Association of Governmental Purchasing
Modifications                                            2008 Spring Conference




All modifications require exchange of
adequate consideration
modifications resulting in the agency
accepting more risk, such as when a
contractor requests relief from a bond
or letter of credit
Modifications whereby the contractor is
relieved of some performance obligation

           Virginia Association of Governmental Purchasing
Hypothetical:
Modifications                                            2008 Spring Conference




Who has authority to execute contract
modifications?

    A. Contract Administrator
    B. Buyer
    C. Either A or B



           Virginia Association of Governmental Purchasing
Hypothetical:
Modifications                                           2008 Spring Conference




  What effect does an oral contract
        modification have?

                       NONE




          Virginia Association of Governmental Purchasing
Hypothetical:
Modifications                                                2008 Spring Conference




Two places where requirement for written
contract modification may be found:
  1) Expressly stated in Vendor’s Manual §7.1
  2) Use of a merger clause:
     Entire Agreement. This contract and all
     attachments thereto constitute the entire
     understanding and agreement between the
     parties with respect to the transactions
     contemplated herein. No oral agreements or
     representations shall be valid and binding upon
     the parties unless expressly contained herein or
     by a written amendment to this contract.


               Virginia Association of Governmental Purchasing
Modifications                                             2008 Spring Conference




What happens if your contractor notifies
you he can no longer perform and
another business will be taking over?
  This is a good time to contact counsel and
   review options to determine which
   direction will best suit your needs while
   protecting your interests




            Virginia Association of Governmental Purchasing
Extensions &
Renewals                                                     2008 Spring Conference




What is the difference between a contract
extension and a contract renewal?
   Extension: continues contract on the same terms
    for a further period in order to complete the work
   Renewal: grants a new contract on the same or
    similar terms for an additional period
Both must be done prior to expiration of
contract



               Virginia Association of Governmental Purchasing
Extension                                                 2008 Spring Conference




May be used to permit completion of
work undertaken, but not completed
during the original term of the contract
  no additional consideration may be paid


May be used in other exceptional or
extenuating circumstances for a period
of time not to exceed 6 months

            Virginia Association of Governmental Purchasing
Renewal                                                  2008 Spring Conference




May be used only where expressly
permitted in the contract, and provided
that all necessary conditions have been
met




           Virginia Association of Governmental Purchasing
The end is near!                                          2008 Spring Conference




Expiration by own terms
Termination by the Government
  For convenience
  For breach or default




            Virginia Association of Governmental Purchasing
Termination for
Convenience                                              2008 Spring Conference




What findings must the government
make regarding the contractor’s
performance in order to terminate for
convenience?

                        None



           Virginia Association of Governmental Purchasing
Termination for
Convenience                                                2008 Spring Conference




Effects of termination for convenience:
  Effective Date – WDTCS?
  Scope of Termination – WDTCS?
  Termination Claims by Contractor
     Is the period for submitting a termination
     claim longer or shorter than the period for
     submitting a standard contract claim?
                 Longer



             Virginia Association of Governmental Purchasing
Hypothetical:
Termination Claims                                        2008 Spring Conference




Payment of termination claims could
constitute the settlement of a claim
against the government
Want to ensure full release of all claims
by contractor
For state agencies, Va. Code 2.2-514
requires approval of agency head and
Attorney General prior to settlement

            Virginia Association of Governmental Purchasing
Termination for
Default                                                   2008 Spring Conference




Effects of termination for default:
  Effective date – WDTCS?
  Need to re-procure goods or services


Risks of termination for default
  Anticipatory repudiation




            Virginia Association of Governmental Purchasing
Terminations                                             2008 Spring Conference




     You may find it helpful to consult
  legal counsel prior to terminating a
contract, and you may be required to
consult legal counsel prior to payment
of any termination claims or any other
claim resulting in a waiver of potential
     cross-claims by your agency


           Virginia Association of Governmental Purchasing
Conclusion                                            2008 Spring Conference




        Virginia Association of Governmental Purchasing

								
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