Best Value Criteria Are Not Permissible in Competitive Sealed Bidding Procurements

In 2000, Virginia's General Assembly amended the Public Procurement Act ("PPA") to introduce the concept of "best value" into certain procurements.  In a "best value" procurement, price is but one of several factors to be considered in the award of a contract as established by evaluation criteria stated in the solicitation.  "Best value" means the overall combination of quality, price, and various elements of required services that are optimal relative to a public body's needs.  As the Supreme Court of Virginia made clear in a decision handed down in April 2012, however, "best value" has no place in competitive sealed bidding.

In Professional Bldg. Maintenance Corp. v. School Board, the Spotsylvania County School Board published a "Best Value Invitation for Bid" seeking bids for custodial services for various county schools. The invitation stated the School Board would utilize "best value" criteria to select the winning bidder, such as expertise and experience of the bidder and its employees, proposed equipment and supplies, a quality control program and price.  The criteria were weighted and the bidders were evaluated based upon their total score.  Professional Building Maintenance Corporation ("PBM") submitted the  bid with the lowest price.  However, the School Board issued a notice of intent to award the contract to another bidder who had the highest total score based upon points given for various "best value" criteria.

PBM subsequently filed a formal bid protest with the School Board. Upon the School Board's denial of the protest, PBM brought suit alleging, among other things, that the School Board violated the PPA by not awarding the contract to PBM, which was the lowest responsive and responsible bidder. The trial court dismissed PBM's suit, finding that "best value" is a method of procurement permitted for public bodies and the School Board's solicitation met the legal requirements for a "best value" procurement.

On appeal, the Supreme Court of Virginia reversed the decision.  In doing so, the court noted that under the PPA, the School Board's contract for custodial services was required to be procured under the competitive sealed bidding process. That process required "award to the lowest responsive and responsible bidder."  Thus, ruled the court, "the School Board was required to award the contract to the lowest responsive and responsible bidder.  Although the Act permits public bodies to 'consider best value concepts when procuring goods and nonprofessional services,' . . . it does not provide the School Board with a method of procurement in lieu of competitive sealed bidding."

While the PBM case clearly provides that "best value" criteria are inappropriate in competitive sealed bidding, the School Board could have conducted  a "best value" procurement for custodial services had it followed the PPA's requirements for a competitive negotiation procurement.  This method would have required the School Board to:  (1) make an advance determination in writing that competitive sealed bidding was either not practicable or not fiscally advantageous to the public, and (2) otherwise comply with the PPA's requirements for a competitive negotiation procurement.  Unlike competitive sealed bidding, competitive negotiation allows award to the offeror  making the "best proposal" in the opinion of the public body based on factors, including price if stated, contained in the solicitation.  Unfortunately for the School Board, it incorporated "best value" criteria in a procurement where low price from a responsive and responsible bidder could be the only determining factor in awarding the contract.  

For additional information on this topic, please contact the author, William R. Mauck, Jr.

Spotts Fain publications are provided as an educational service and are not meant to be and should not be construed as legal advice. Readers with particular needs on specific issues should retain the services of competent counsel.