"It seems clear to us that the pivotal issue before the trial court and in this appeal is whether the Lottery can treat the RFP process as little more than a ranking tool to determine a preferred provider and then negotiate a contract with that provider with little or no concern for the original proposal of that preferred provider." That's how a Florida appellate court characterized a Florida Lottery RFP process in 2001, thus declaring the contract null and void.

In the February-March edition of Go Pro, we covered the issue of responsiveness in RFPs at the time of proposal submission. This time, let's look at the other end of the process and address the permissibility of executing a final contract that changes requirements in the RFP or the proposal.

The Florida GTECH case

In the Florida case, at issue was a follow-on contract for computerized gaming services [Florida Department of Lottery v. GTECH, 816 So.2d 648 (Fla. App. 1 Dist. 2001)]. The Lottery issued the RFP in 1995, before the expiration of the existing contract, and awarded the contract to the incumbent, Automated Wagering International, Inc. (AWI). In 1996, GTECH filed a protest against the award, alleging material errors in the evaluation. In 1997, the Lottery adopted an administrative law judge's recommendation to reevaluate the proposals.

The Lottery and AWI executed the contract after the reevaluation. GTECH filed another court action challenging the award and claiming that the contract between the Lottery and AWI omitted or altered various material provisions required in the original RFP. The trial court sided with GTECH and declared the Lottery/AWI contract null and void.

The appellate court sustained the lower court's decision. The opinion accepted the trial court's finding of fact that "the negotiated contract was financially more favorable to AWI than was the proposal by which it became the winning bidder," without identifying the differences. The appellate court concluded that RFP language did not permit the Lottery to eliminate all but the most favorable bidder and then later privately negotiate the price and terms that bore "little resemblance to the proposal that earned AWI preferred provider status in the first instance."

The court rejected the Lottery's primary argument that the RFP language permitted exclusion of GTECH (the only other offeror), and thereafter the Lottery was no longer bound by the competitive bidding statutes. So the court avoided the issue of whether there was a "material difference" between the proposal (that incorporated RFP terms) and the executed contract.

The practical utility of the GTECH case may be limited by the court's narrow rationale for its decision, because the "material difference" test was never really applied. A more recent New Jersey case is more helpful in fleshing out an approach to evaluating the effect of post-award changes to proposal or RFP terms during contract execution.

New Jersey CFG Health Systems case

The GTECH case hinted that the executed contract could not be materially different from the RFP and proposal as finally evaluated. In 2010, a New Jersey court plainly said so. [CFG Health Systems, LLC v. County of Hudson, 994 A.2d 1045 (N.J. Super. Ct. App. Div. 2010)].

In CFG, the county issued a request for proposals before the expiration of the medical and mental health services contract for a county correction center. The RFP required a minimum of 1,653 hours of staffing per week.

CFG's proposed price was about 40 percent higher than the price of the incumbent. Both proposal amounts exceeded the county's budget expectations, and the county retained an expert to review the staffing requirements. Before the consultant had completed its report, the board of county commissions adopted a resolution approving the award to the incumbent (with the lower cost).

Eventually, after completion of the consultant's report, the staffing hours were reduced about 30 percent from the amounts specified in the RFP. The county commissions approved a resolution approving the amendment to the contract with the incumbent.

CFG then filed an action in court challenging the resolution. The trial court invalidated the county resolution approving the contract. CFG appealed that decision.

The appellate court agreed with the trial court that the post-award revisions to RFP requirements were not "minor or inconsequential" and the kind of minor irregularities (in sealed bids for example) that could be waived. Moreover, the court rejected the county's reliance on precedent in construction contracts that permitted contract amendments where unanticipated subsurface conditions are found. The court also rejected the argument that an RFP clause reserving the right "to alter or change the procurement process" provided the authority to materially reduce the staffing requirements in the final contract.