ALJDEC decisions subject to certification as final

19-0002-PHX · City of Phoenix · 2019-09-16

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

APPEARANCES: No appearance(s) by either party. Agency record submitted for administrative review on behalf of Deryck Lavelle, Esq., Sr. Assistant City Attorney for the City of Phoenix (“City”) and Dennis K. Burke, Esq. for Ballard Spahr LLP (“Ballard Spahr”). HEARING: No hearing was conducted; the matter was resolved based on the administrative record provided by the City to the Office of Administrative Hearings (“OAH”). ADMINISTRATIVE LAW JUDGE: Jenna Clark. _____________________________________________________________________ FINDINGS OF FACT Background 1. The City and OAH have a contract under which OAH conducts administrative review of appeals of procurement disputes as provided for in Phoenix City Code, Chapter 43. 2. On August 02, 2019, the City referred this matter to OAH for administrative review. 3. The underlying issue for administrative review in this matter is Ballard Spahr’s protest and appeal of a proposed award resulting from the City’s Request for Proposal for Mexico Trade Development Consulting Services (“RFP-CED19-MTD”). 4. RFP-CED19-MTD was issued on March 21, 2019, by the City’s Community and Economic Development Department (“CEDD”) Procurement Manager, Gretchen Wolfe, to the City’s Community and Economic Development Director, Christine Mackay. 5. RFP-CED19-MTD sought proposals from parties with three or more years of experience for trade development consulting services between Mexico and Phoenix to facilitate economic activity, such as investments, development, and employment, for an initial term of two years with three one-year renewal options to be exercised at the discretion of the City. 6. RFP-CED19-MTD provided that the CEDD would perform a review of received proposals for responsiveness. Specifically, an evaluation panel (“Panel”) would evaluate proposers based on a proposer’s (a) approach to the scope of work, (b) qualifications and experience, (c) primary consultant’s qualifications and experience, and (d) fees, and score proposers in each category for a maximum total of 1,000 points. 7. On April 09, 2019, at 11:00 a.m. an optional pre-proposal meeting took place at Phoenix City Hall so that the CEDD could review RFP- CED19-MTD and answer prospective proposer inquiries. The deadline for proposers to submit their written response to Panel questions was April 12, 2019, at 11:00 a.m. 8. On April 11, 2019, proposer Ballard Spahr submitted answers to questions 1-12 to the Panel. On April 15, 2019, Ballard Spahr submitted a revised answer to question 2, and additional answers to the Panel for questions 13-44. 9. The deadline to submit a proposal was April 22, 2019, at 11:00 a.m. 10. Five proposers submitted proposals for RFP-CED19-MTD, but only three proposals complied with mandatory submission requirements: Molera Alvarez LLC, The Morris Group USA, and Ballard Spahr. The other two proposals were disqualified. 11. On May 24, 2019, an Award Recommendation for RFP-CED19-MTD was issued to the Director of the CEDD. 12. On June 06, 2019, the Award Recommendation was signed by the Director of the CEDD. 13. On June 10, 2019, the City posted a Public Notice of Award Recommendation showing that its evaluation committee had recommended that Molera Alvarez be awarded the contract. Timeliness 14. RFP-CED19-MTD provided that a preliminary offer tabulation would be posted on the City’s website, https://www.phoenix.gov/solicitations, within five calendar days of the offer opening, and that the award recommendation posted to the website would be the only notification provided to the unsuccessful offerors. 15. RFP-CED19-MTD provided that any protests must be submitted to the City within seven calendar days after the posting of the award recommendation, through the City’s website https://solicitations.phoenix.gov/Solicitations/Details/422. Phoenix City Code at Section 43-25 (Protests) also shows that any protest was required to be submitted within seven days of the notification of the award recommendation. 16. Because the City posted the Public Notice of Award Recommendation on June 10, 2019, protests had to be received by the City on or before June 17, 2019. 17. Ballard Spahr filed with the City a protest via email and hand delivery on June 17, 2019. Ballard Spahr’s protest was timely filed. Merits 18. RFP-CED19-MTD at Section V, subsection L (Protests), provides that all protests must include a detailed statement describing the legal and factual grounds for the protest, including copies of relevant documents. 19. Phoenix City Code at Section 43-25(B) (Protests) provides that a protest must include a detailed statement of the legal or factual basis of the protest including any copies of relevant documents, and that a protestor must establish that it had a substantial chance of being awarded the contract and will be harmed by the recommended award. 20. Ballard Spahr’s protest provided the following statement, in pertinent part, regarding the legal and factual basis for its protest: Ballard Spahr files this protest because (1) the scoring system used by the City to rate bids for the Contract was fundamentally flawed, favoring low hourly rates while ignoring completely the amount of hours each bidder proposed to spend, (2) the RFP was structurally flawed in that it improperly favored the Incumbent, rewarding access to information obtained exclusively through the incumbency, (3) the Incumbent falsely claimed ownership of products and services in its proposal for which it was already paid and that are in fact owned by the City and thus available to any successful Proposer, thereby misleading the Review Panel, and (4) one of the panelists evaluating and scoring the proposals has an undisclosed conflict of interest, failed to disclose the conflict, and thereby fatally tainted the entire review and scoring process by the Panel.

21. Ballard Spahr’s protest did not include a detailed statement of the legal basis for its protest. Ballard Spahr did not establish that it had a substantial chance of being awarded the contract. 22. On July 15, 2019, the City issued a Protest Response denying Ballard Spahr’s protest because it found that Ballard Spahr failed to establish any factual or legal basis to set aside the evaluation panel’s recommendation, disqualify Molera Alvarez, and award the contract to Ballard Spahr as the next highest bidder. The City noted that Ballard Spahr failed to show how its proposal was better than Molera Alvarez’s, or that its proposal was somehow objectively entitled to an award of more points than it received, and that Ballard Spahr did not demonstrate that no reasonable person could have scored the proposals the way the evaluation panel did in this instance. The City also refused to rebid the contract in its entirety. 23. On July 22, 2019, Ballard Spahr filed its Appeal of Denial of Protest under RFP-CED19-MTD. 24. In its Appeal, Ballard Spahr argued that (1) Ballard Spahr was more experienced than Molera Alvarez, and also had a more successful track record than Molera Alvarez (2) members of the Ballard Spahr team were “integral players” of the largest investment by Mexico in Arizona, (3) trade missions were crutches and not a substitute for deals, (4) the City’s Mexico Trade Plan was mysteriously shrouded in darkness, and thereby inhibited trade opportunities with Mexico, (5) Ballard Spahr’s proposal was realistically priced in fees and the City drastically overspent for Incumbent’s value to date, and (6) the City had no media plan to benefit its efforts and goals on Mexico Trade. 25. Ballard Spahr also argued that the City failed to address its protest contentions in its Response/Denial to Ballard Spahr, and further argued that the Panel’s scoring of its proposal was “absurd.” 26. Ultimately, Ballard Spahr argued that the City should have overturned its Response, disqualified Molera Alvarez, and rebid RFP- CED19-MTD. No legal arguments were offered. CONCLUSIONS OF LAW 1. The City has jurisdiction over the subject matter in this case. 2. The Director of OAH is authorized to enter into contracts with political subdivisions of this state for the purpose of providing administrative proceedings. See Ariz. Rev. Stat. § 41-1092.01(J). 3. The City contracted with OAH to provide the administrative proceeding in this matter, including the preparation of Findings of Fact, Conclusions of Law, and Recommended Order for action by the City. 4. Ballard Spahr bears the burden of proof in this matter. See Vazzano v. Superior Court, 74 Ariz. 369, 249 P.2d 837 (1952); see also Ariz. Admin. Code R2-19-119. 5. The standard of proof on all issues is that of a preponderance of the evidence. See Ariz. Admin. Code R2-19-119. 6. A preponderance of the evidence is: The greater weight of the evidence, not necessarily established by the greater number of witnesses testifying to a fact but by evidence that has the most convincing force; superior evidentiary weight that, though not sufficient to free the mind wholly from all reasonable doubt, is still sufficient to incline a fair and impartial mind to one side of the issue rather than the other.

Black’s Law Dictionary 1373 (10th ed. 2014). 7. Phoenix City Code Chapter 43 governs procurement issues. 8. This matter is suitable for resolution based on the administrative record. Phoenix City Code at Section 43-26(E) (“If assigned to a hearing officer for fact finding, the appeal may be supplemented in the discretion of the hearing officer ….”). 9. Phoenix City Code at Section 43-25 (Protests) provides: A. Protests regarding solicitations issued under this chapter may be submitted to the Procurement Officer as set forth below: *** 2. Offerors or respondents may protest an adverse determination issued by the Procurement Officer, regarding whether the offeror or respondent is responsible or its offer or response is responsive, within seven days of the date the offeror or respondent was notified of the adverse determination. 3. Offerors or respondents may protest an award recommendation if the offeror or respondent can establish that it had a substantial chance of being awarded the contract and will be harmed by the recommended award. *** B. To be considered, all protests under this section must be submitted in writing and must include the name, address, telephone number, e-mail address and signature of the protester or its authorized representative; the solicitation number and title; a detailed statement of the legal or factual basis of the protest including any copies of relevant documents; and the relief requested. An offeror or respondent protesting an award recommendation shall also establish in its protest that it had a substantial chance of being awarded the contract and will be harmed by the recommended award. Protests received after the protest due dates set forth in this article will not be considered, except for good cause.

10. Under Phoenix City Code at Section 43-8 (Definitions) “Days” means “[C]alendar days, except as otherwise expressly provided in this chapter.” 11. Under Phoenix City Code at Section 43-8 (Definitions), “Good Cause” is defined as: Substantial grounds or evidence based upon facts not in dispute as determined by the Procurement Officer that the failure by an aggrieved party, an offeror or a respondent to submit a timely offer, response, protest or appeal was beyond its control due to misinformation relayed in writing by a City employee.

12. Appeals of adverse decisions related to protests must be filed within seven days of the protest decision. “The scope of an appeal, the evidence presented and arguments made may not extend beyond the scope of the original protest by the aggrieved party, offeror or respondent.” Phoenix City Code at Section 43-26. 13. A city’s procurement decision should not be disturbed absent a finding that the decision was “illegal, unfair or arbitrary.” Brown v. City of Phoenix, 77 Ariz. 368, 377, 272 P.2d 358, 364 (1954). 14. An arbitrary action is an “unreasoning action, without consideration and in disregard for facts and circumstances; where there is room for two opinions, the action is not arbitrary or capricious if exercised honestly and upon due consideration, even though it may be believed that an erroneous conclusion has been reached.” Maricopa County v. Gottsponer, 150 Ariz. 367, 372, 723 P.2d 716, 721 (App. 1986)(quoting Petras v. Arizona State Liquor Board, 129 Ariz. 449, 631 P.2d 1107 (App. 1981)). 15. Here, Ballard Spahr’s protest did not comply with Phoenix City Code at Section 43-25 because it did not include a detailed statement of the legal basis of the protest. As such, Ballard Spahr’s protest and appeal should be dismissed. 16. Additionally, in its protest Ballard Spahr did not establish that it had a substantial chance of being awarded the contract or that it will be harmed by the recommended award. As such, Ballard Spahr’s protest does not comply with Phoenix City Code at Section 43-25 so its protest and appeal should be dismissed. RECOMMENDED ORDER In view of the foregoing, it is recommended that Ballard Spahr LLP’s protest and appeal be dismissed. Done this day, September 16, 2019.

/s/ Jenna Clark Administrative Law Judge

Transmitted electronically to:

Ed Zuercher, City Manager City of Phoenix -----------------------

Office of Administrative Hearings 1740 West Adams Street, Lower Level Phoenix, Arizona 85007 (602) 542-9826