Podcast: Discussing Government Procurement with Karen Walker and Tiffany Roddenberry

Nate Adams: Welcome to our Florida Capital Conversations podcast series. Today, our subject is state and local government procurement, and our guests are Karen Walker and Tiffany Roddenberry. Karen Walker is a partner and the Government Section Leader for Holland & Knight. Karen represents clients in all aspects of state and local government procurement across the nation. She has been recognized as a Best Lawyer in America and Super Lawyer. Tiffany Roddenberry is also a partner for Holland & Knight. Tiffany practices commercial, administrative and appellate litigation. Super Lawyer calls Tiffany a Rising Star. My name is Nathan Adams. My co-host is Mia McKown. Mia, you also practice in the state and local government procurement area, isn't that right?

Mia McKown: I do, Nate, have a good experience of working with Karen and Tiffany on many procurement matters. Their historical perspective and working these cases over the past several years, I think, will be very interesting for our conversation today. I don't think people realize how much money is spent by our state and local governments, and that's going to kind of frame, I think, Karen and Tiffany, maybe some of our discussion today because I know with that much money at stake and with the government being involved, there are a lot of particular rules and regulations in place. And there also are some things that the government, their hands can't be tied, so to speak, so there aren't procurement rules and regs and there's some flexibility. Karen, why don't you tell us a little bit of background about yourself and your practice? And then Tiffany, and then we can get more into this interesting aspect of state and local procurement?

An Introduction to State and Local Government Procurement and Common Exemptions

Karen Walker: Sure. Thank you, Nate. Thank you, Mia. So I have been practicing law with Holland & Knight for 28 years, and the vast majority of that time, my practice has included state and local government contracting both in Florida and throughout the country. And what I have found is that while the laws can vary from jurisdiction to jurisdiction, many or most of the principles are the same. And in some cases, the procedures and the laws are very similar, regardless of what state or local jurisdiction you're in. And our practice in state and local government procurement is not industry-specific. So it ranges from everything from construction clients to nonprofits to information technology clients. It's basically anybody who sells products or services to a state entity or a local government. And Mia, to your point about the volume of contracting that occurs, in the state of Florida alone, billions of dollars are spent every year by the state contracting with private sector entities. That money comes from the state budget. Local governments have their own budget based on their own tax revenues. And then there's also flow through dollars that come from the federal government that flow through the state or to local governmental entities. And some of that is the largest portion of the state budget, for example, Medicare and Medicaid dollars. That is only going to increase in light of particularly the infrastructure bill that was just signed into law by the president last week, because that means those dollars are going to flow to state and local government and that money is going to be available to contract with private sector companies. And those contracts are going to need to be competitively procured unless they fall within an exemption. And I believe throughout this podcast, we're going to talk about what some of those exemptions or exceptions to competitive procurement are. But there's going to be many more dollars flowing. And I think what we'll see is more straight up procurement instead of an emphasis on public-private partnerships, because there's not going to be the need any more for private sector investment and government projects because there is going to be such an influx of government funding.

Nate Adams: Tiffany Roddenberry, tell us a little bit about your practice. And then Karen's already teed up a key question here, and that is what are some of the exceptions to the competitive procurement solicitation process? But let's begin a little bit with telling us about your practice area.

Tiffany Roddenberry: Sure, a lot of my practice dovetails with what Karen talked about, but a lot of my work really deals with litigation involving government contracts, which in this context typically means bid protests, where we're either representing the winning contractor or the losing contractor in challenging an intended award by a governmental entity. And the other piece of my practice that does fall into this context, too, are deals with public records. I think contractors sometimes forget that in dealing with governmental agencies, a lot of the records that they're creating, even records that might be commercially sensitive, those are going to be potentially public records in the hands of the agency that they're contracting with. So a lot of my work, too, also deals with helping clients navigate public records requests and trying to protect that sort of information. Nate, to your question about exemptions, and this obviously differs per jurisdiction, but some of the exemptions are, you'll see the same ones pop up over and over again, such as a sole source purchase, which is traditionally, there's only one entity out there that provides this service or product, and there's an exemption that's created to kind of account for that instance.

Mia McKown: And Tiffany, in the sole source, I think though, the state agency still has to do some documentation to justify that right? It's not they just get to ordain it that it's a sole source.

Tiffany Roddenberry: Right. I mean, there still has to be notice given of the intended sole source purchase. Most of these, most of the exemptions, especially in Florida, still require you to pretty much document what exemption you're operating under and why you need it. Another common example of an exemption is one for emergency purposes, which typically are purchases needed because there is some threat to public welfare or safety. And in those instances, it doesn't require necessarily the same formal competitive procurement that you would ordinarily have to follow in Florida. You essentially have to show what the emergency is, and the contract should only last for the length of the emergency that necessitated the emergency procurement.

Nate Adams: Tiffany, that's pretty common in the hurricane season. Isn't that right?

Tiffany Roddenberry: Yes it is. I think Mia's had a few of those kind of procurements herself.

Mia McKown: Yes. And especially in mental health services and things of that nature where they were trying, it wasn't just goods, it was consulting services and other things that they were trying to provide to people in need. That does come up quite a bit. What about piggybacking? Is that an exemption to procurement?

Tiffany Roddenberry: Yes. In certain instances you can essentially piggyback off of an existing governmental contract, and that's typically provided by statute or rule, whether you can operate under that exemption. A few others that, for example, if there's existing, called state term contracts, you might be able to purchase off that and don't have to go to a separate competitive procurement for that product or service. And there's also something called cooperative purchasing, where one entity procures the contract or contracts on behalf of multiple state and local governmental entities. They all can kind of benefit from that one contract or that one competitive procurement.

Mia McKown: Karen, would you agree that with some of the exemptions, it seems like the idea is that the integrity of the process is somewhat already built into that, that they're the only entity that can provide the service or you're piggybacking on something that has already been competitively procured, so that they're protecting that fairness and fair playing ground. Is that kind of the concept maybe behind the exemptions?

Karen Walker: Yes, that's the concept behind the exemptions. As you mentioned in the piggybacking exemption, piggybacking only works if the contract that's being piggybacked off of was itself competitively procured, and in most situations, the piggybacked contract, you can only use those same terms and conditions in the new contract that was not competitively procured. And the other situation, though, is where there's either such exigent circumstances that there's not time to conduct a full-blown competitive procurement — for example, the emergencies we talked about — or it just wouldn't make sense. So if there's only one entity in the world that can provide a particular product or service, it doesn't make sense to go through the competitive procurement process to only end up with that entity. And that's the basis of a sole source procurement exception.

Procurement Do's and Don'ts: The "Cone of Silence" and Specification Protests

Mia McKown: I know you and I have helped clients when they're trying to introduce their services or their products to the state and they worry about, there's kind of silence issues they want to be careful about, and they want to make sure that their proposal doesn't become the basis necessarily for an RFP. What do you think is the best practices for a company that's wanting to introduce their products and what they have to offer to the state?

Karen Walker: That's a good point. The work we do doesn't just involve the procurement litigation that Tiffany mentioned. That's a big portion of the work that we do, all aspects of government procurement, and the first step in the procurement process oftentimes is introducing the product or service the company wants to sell to the potential government customer. And before a solicitation hits the street, there are very few limitations on that. You can have meetings with the agency. You have to comply with the applicable lobbyist registration laws, and Florida procurement is something that triggers executive branch lobbying registration and reporting requirements. Many local governments have similar lobbyist registration requirements if you engage in procurement lobbying, but in terms of meeting with the agency, there's typically not a prohibition on that if the agency is willing to do it. The thing you have to be careful about is that if you are going to participate in a competitive procurement that you don't draft the specifications. And so oftentimes times we have clients that want to send proposed language to a governmental agency that they want them to put in their RFP or invitation to bid. That is not a good idea, because that is effectively drafting the solicitation. What we suggest is that if the client has examples of other jurisdictions that have issued competitive procurements that they think are good examples they should share with this new prospective customer, they can direct them to those other competitive procurements to take a look at other examples where a governmental entity — it may be in Florida, it may be elsewhere — has procured a similar product or service so they can see how that was done.

Nate Adams: You know, so if I'm a company and I'm interested in potentially becoming involved in procurement process first, where do I go? Where do I look? And what are the first steps that I should take to respond to such a procurement?

Karen Walker: So the first thing is you need to monitor wherever the procurements are posted. So the state agencies of Florida are posted on the vendor bid system. Local governments often use other types of services, and a prospective vendor can sign up to receive notices when the type of product or service they're selling is the subject of an open competitive procurement. Once the solicitation hits the street, then it's really important to understand if it's a state agency contract that the cone of silence goes into effect. There's the statutory cone of silence. And what that means is if you are going to bid on that contract, you cannot have any communication about the competitive solicitation with anybody in the executive branch or legislative branch in Florida government. That means any employee as well as any officer. The only person you can communicate with is the point of contact that's designated in the RFP and pursuant to the parameters set forth in the RFP. And it will allow you to do things like ask questions oftentimes or seek clarification. But if you violate the cone of silence, it is basis for disqualification of your proposal, and so it can have dire consequences. So it's really, really important to understand that.

Mia McKown: Karen, on that cone of silence, too, I think what we have found that even if there is no bad intent with the communication or it may be for informational or anything, there's no intention to impact the procurement, even those nebulous type of communications can be problematic, right?

Karen Walker: That is correct. The case law in Florida on this is not favorable to vendors that have any prohibited communication. In fact, there is a decision from 2020 out of the First District Court of Appeal that found that picketing an agency outside its headquarters violated the code of silence, as well as running ads in a newspaper that were all about the competitive procurement. And so it's not just even a direct communication via email or telephone call to someone at the agency, it can be something indirect that is designed to influence the procurement. I'm not sure if it was you or Nate that asked the question about what to do when the solicitation hits the street. Besides being aware of the code of silence, you should review the solicitation immediately cover to cover and make sure that you can respond to it, number one, and that there's nothing in it that would prohibit you from responding or give your competitor an unfair competitive advantage. If you cannot respond, then you need to think about filing a specification protest. And you need to act very quickly because you have 72 hours if this is a state procurement, 72 hours from when the invitation to bid or RFP is posted on the vendor bid system, to file a notice of intent to protest the specifications. If you don't do that, you forever waive your right to complain about what is in the specifications. Now, that doesn't mean you should necessarily protest every issue in its specification, but I'll give you a good example. We had a client years ago, there had been a patent on a particular chemical product that the Department of Environmental Protection was purchasing. That patent expired, and so there was suddenly competition in the marketplace. The agency put out a procurement that required experience that only one person in the entire world could satisfy because of the company having the patent. And so that was a particular situation where it was a perfect specification protest because the way the specifications were written, they would preclude competition. So that's a good example. In other situations where there are things that are drafted a certain way you think could be drafted more favorably to your company, you might not want to protest the specifications so early in the process. You may want to ask a question about them, and then the agency will issue answers to those questions in the form of an addendum. And that addendum creates another point of entry. If you don't like the answer to the question, then you can try to protest the answer to the question as a specifications protest at that point in time.

What Happens If You Lose?

Mia McKown: Tiffany, if a company loses a contract and they go through the process of whatever the competitive procurement is and they lose the contract, they're not the winner, winner, chicken dinner, didn't get the magic ticket, what should they do?

Tiffany Roddenberry: As Karen mentioned, there are some very strict deadlines, particularly in Florida, for protesting an intended agent decision on a contract. The first step is to contact legal counsel if you don't have them already, but also review the solicitation document, the RFP, and see what the protest procedure is. And under Florida state law, it'll usually be contained in the solicitation document itself, as well as in the statute. For some jurisdictions, you are combing the county website looking for a policy manual to know that to give you a better idea what procedure is. But typically it's a very short timeframe. In Florida, you have, that same 72 hour period applies for at least filing a notice of protest, so the 72 hours to file a notice of protest is keyed off of when the intended agency decision is posted to the vendor bid system.

Mia McKown: Does the notice of protest have to be very, very detailed? You may not know all your grounds at that point. What does the notice entail?

Tiffany Roddenberry: Right. Under Florida law, the notice of protest is very, very short. You don't need to have your crown set forth yet, but once you file notice of protest you then have 10 days to file the formal protest, which will have to outline your grounds. You've got the agency decision. Sometimes they'll post a scoring document that you can see how you fared against your competitors, but you usually have very little information. So we typically advise sending a public records request as soon as you can, and to get a copy of the winner's proposal as well as any scoring documents so you can see how you stacked up and what you need to do to win. Because in Florida — and I think in most jurisdictions — you have to have standing to protest, and that means that you have to show that you would have been entitled to the contract but for the issue you want to complain about. So if there is only one contract to be awarded and you're ranked fourth, then you're going to knock out everybody in front of you. This comes up a lot in Florida Housing Finance Corporation contract awards, which is their awards for, essentially, tax credits. But Florida Housing uses a very complicated kind of funding formula per solicitation document. So computation is going on to see how many people you have to actually knock out to get into position to potentially win. So that's, I would say, contact and find counsel if you don't have them. Get your notice of protest in timely and get a public records request again and get as much information as you can so you can start building your protest.

Mia McKown: And those time deadlines are really important in procurement. Unlike other litigation that we do, there's some times the court will allow or extend a deadline because of some type of mistake. But on the procurement deadlines, they are pretty hard and fast, and if you don't meet each deadline along the way, then you won't have standing, you're not able to proceed. So I agree.

It's very, very important that they get on it right away and not wait because 72 hours flies.

What Happens If You Do Win?

Nate Adams: Karen, we've been talking about what happens if you don't win, but you know, ideally you do win. And when you do win, sometimes you have to deal with somebody else who's upset about the fact that you won. Tell us a little bit about that process.

Karen Walker: Well, first of all, usually when you win, it's through a notice of intent to award, which means you don't officially have the contract yet. You've got to go through the time period within which someone can file a protest. So one of the things you should do is understand what those procedures are and time period is for someone to file a protest. You need to be careful not to be reaching out to the agency during that time, particularly if this is a state agency contract you've won because again, that cone of silence, it doesn't expire until the notice of intent to protest period has run. So you don't want to be contacting the agency in that initial 72 hour period. But if you find out there's been a protest filed or a notice of intent to protest filed, at that point then you can coordinate with the legal counsel for the agency. And again, we recommend you retain counsel, have them coordinate with legal counsel for the agency, find out what's going on with the protest, get a copy of it, get the relevant public records, including the proposal or bid submitted by the protestors, so that you can look at that and see if potentially they have issues that could affect their standing, such as they are nonresponsive or non-responsible. And then you need to prepare to help the agency defend the protest. Sometimes we get companies that don't contract regularly with state and local governments, and they expect the agency to take the lead in defending a protest. Honestly, that happens rarely. The agency likes to see the winning bidder.

Looking Ahead: Hot Procurement Topics for 2022

Mia McKown: And I know in other cases we've had, there's been a really active joint participation in defense, Karen, with the state agencies, so that can vary from agency to agency, and maybe sometimes depends, I think, on how long the agency has invested, right, in this particular procurement. How many years because they don't want to have to go back to the drawing board, either, if they don't prevail. So it's not a one size fits all. Every situation is different as to how involved the agency is going to be. You mentioned that the infrastructure bill that passed in Washington last week is going to have a big impact on state and local procurement, not just in the state of Florida, but in the country. What other hot areas do you guys see in 2022 in our near future in the area of state and local procurement?

Karen Walker: One area we're seeing a lot more of right now in this cooperative purchasing through these entities, such as NASPO Value Point. And if you're not familiar with the NASPO Value Point, NASPO is the National Association of State Procurement Officials, but it has an arm called Value Point. And what they do is conduct a competitive procurement on behalf of multiple states. And then those states can use that procurement to make a purchase without conducting their own separate competitive procurement. It's not exactly a piggybacking. It's a cooperative purchase, but we're seeing more and more of that being used throughout the country, and I think we're going to continue to see that, particularly because at some point, with all of these new dollars flowing to state and local governments, they're going to have to be more efficient in their procurement processes because they're going to have so many procurements going at once.

Karen Walker: What about information technology, Tiffany? Do you see anything in the future for that?

Karen Walker: Yes. And I think that's going to mean, I think that's been in a hot area and it's going to continue to be one. We're moving toward more automation. So I think that's, I mean, that's been a driver of procurement in the last year so I think it will continue to be.

Mia McKown: Karen, Tiffany, I think it's interesting, the three of us have probably spent the past several years doing a lot on public-private partnerships, the PPPs. I mean, how long has that statute been in place, Karen, and hardly anybody used it, and then they finally started to use it, and now we'll probably see less of it?

Karen Walker: I don't think P3s are completely going away. I just think there's going to be a lot less interest in them because there's not going to be the need for the private sector funding with the large amount of federal dollars that are going to be flowing to state and local governments, at least over the next several years.

Nate Adams: It really sounds to me like if clients are waiting until the 72 hour window commences, that's probably too late. They really need to have counsel on the front end of these procurements, particularly when we're talking about large dollars to help them even navigate the preparation of the documents and submittal of documents. Of course, they're always going to be folks who are going to need last minute help. I'm sure you all are willing to help them, but am I right that basically, if you can be involved, the front end, we can help out the client a lot more than if we're in a crisis situation?

Karen Walker: That is absolutely right and I can't tell you the number of times we've gotten calls from clients after the 72 hour purchase period has run, saying they want to protest. And the law is clear: In Florida for a state procurement, you've waived your rights. The same is true oftentimes of local government procurements. They may not have the 72 hour rule, they may have a five calendar day rule, but oftentimes the ordinances that set forth those policies very clearly say, if you are late, you waive your rights.

And my experience has been agencies, when they don't have to conduct a protest proceeding, they will avoid it at all cost. And so if you missed that deadline, you're out of luck.

And so, yes, Nate, it's so much better for someone to do a little bit of the work on the front end, get folks involved that understand the procurement process, so that they can hope for the best and prepare for the worst. And at the end of the day, hopefully walk away with a contract or prevent their competitor from getting a contract and have another opportunity to bid in a reprocurement.

Mia McKown: On the one hand, I understand that government would like to be like private sector to be able to go out and purchase whatever they need whenever they need it. But when you're the steward of the taxpayers' money, you do have to have protections in place to make sure they're getting the best possible outcome and bang for their buck. They do try to find that balance between helping the agencies move forward and the government so that they can buy the things that our citizens need versus making sure that the procurement is fair and competitive. It's a tricky balance, but I do think the laws are geared to do that. But it's just you've got to know the laws because they are very, very technical, Nate, and you do need to know those and how to thread the needle and get through the process. Even if you're not involved in public and state local procurement it's an interesting area of law, and I really appreciate Karen and Tiffany joining us today and sharing some of their experiences and perspectives of what they've seen and where they think this is going over the next couple of years.

Nate Adams: Yeah, they absolutely have great, interesting comments on state and local government procurement. And I want to thank Karen Walker, Tiffany Roddenberry, for helping us today understand this area a little bit better, and Mia, your own background has been very helpful. Thank you to you. Most of all, I want to thank all of you for joining us today. And please plan to join us for our next Florida Capital Conversations podcast. Have a great day!