Present: All the Justices
PROFESSIONAL BUILDING
MAINTENANCE CORPORATION
OPINION BY
v. Record No. 110410 JUSTICE ELIZABETH A. MCCLANAHAN
April 20, 2012
SCHOOL BOARD OF THE COUNTY
OF SPOTSYLVANIA
FROM THE CIRCUIT COURT OF SPOTSYLVANIA COUNTY
David H. Beck, Judge
Professional Building Maintenance Corporation (PBM)
appeals from the judgment of the circuit court, which sustained
the demurrer of the School Board of the County of Spotsylvania
(the School Board) and dismissed PBM's action. For the reasons
that follow, we will reverse the judgment of the circuit court.
I. Facts and Proceedings Below
PBM, which is in the business of providing janitorial and
industrial cleaning services, filed an amended complaint
against the School Board asserting causes of action arising
under the Virginia Public Procurement Act, Code § 2.2-4300 et
seq. (the Act). 1 In reviewing the circuit court's order
1
Since the circuit court sustained a demurrer to an
amended complaint that is complete in itself and does not
incorporate or refer to the allegations in the prior complaint,
we consider only the allegations in the amended complaint that
was the subject of the demurrer sustained by the judgment
appealed from. Lewis v. Kei, 281 Va. 715, 719, 708 S.E.2d 884,
888 (2011); McMillion v. Dryvit Sys., Inc., 262 Va. 463, 469,
552 S.E.2d 364, 367-68 (2001); Yuzefovsky v. St. John's Wood
Apts., 261 Va. 97, 102, 540 S.E.2d 134, 136 (2001).
sustaining a demurrer, we "accept as true all facts properly
pleaded in the [amended] complaint and all reasonable and fair
inferences that may be drawn from those facts." Glazebrook v.
Board of Supervisors, 266 Va. 550, 554, 587 S.E.2d 589, 591
(2003).
The School Board published a "Best Value Invitation For
Bid" and addendum (the Invitation) seeking bids for the
provision of custodial services in various schools located in
Spotsylvania County. 2 The Invitation stated the School Board
would utilize the "'Best Value' procurement method" to consider
factors in addition to price "to select the most advantageous
offer." The specific criteria were: expertise and experience
relative to the scope of services (50 points); experience of
personnel assigned to the project (5 points);
supplies/equipment proposed for general cleaning (5 points);
quality control program (10 points); and price (30 points).
Although PBM submitted the lowest bid price among all the
bidders, the School Board issued a notice of intent to award
the contract to the bidder who had the highest score according
2
The Invitation is an exhibit to the amended complaint.
Since accompanying exhibits referred to in the pleadings are
made part of the pleadings, the Court may examine the exhibits
in determining whether the amended complaint states a cause of
action. TC MidAtlantic Dev. v. Commonwealth, 280 Va. 204, 210,
695 S.E.2d 543, 547 (2010); see also Rule 1:4(i)(mention in
pleading of accompanying exhibit shall make exhibit part of
pleading).
2
to the points given for each of the specific criteria. PBM
sent a letter to the School Board expressing its concern that
the bid review process was not carried out in a fair and
objective manner in light of its experience and the fact that
it submitted the lowest bid. Representatives from PBM and the
School Board met to discuss PBM's bid. During the meeting, the
School Board provided PBM with a summary of the points awarded
to each bidder for the criteria set forth in the Invitation.
Subsequently, PBM submitted a formal protest, and the parties
met again to discuss PBM's bid. Thereafter, the School Board
confirmed, in writing, that PBM would not be awarded the
contract. Following the School Board's decision, PBM initiated
these legal proceedings. 3
In its amended complaint, PBM asserts the School Board
violated the Act because it did not award the contract to PBM,
who was the lowest responsive and responsible bidder. PBM also
contends the School Board considered criteria that were not
stated in the Invitation and failed to describe the method for
awarding points for the bid criteria in violation of the Act.
Finally, PBM claims the School Board's failure to select PBM as
3
The written correspondence between the parties, including
PBM's bid protest and the School Board's response, as well as
the summary of the bidders' scores, are exhibits to the amended
complaint.
3
the successful bidder was not an honest exercise of discretion,
but was arbitrary or capricious.
The School Board filed a demurrer to the amended
complaint, asserting the contract was to be awarded to the best
value bidder, not the lowest responsible bidder. The School
Board further asserted the allegations of the amended complaint
are not sufficient to support the claim of arbitrary or
capricious actions.
The circuit court sustained the School Board's demurrer
finding that "Best Value" is a method permitted for public
bodies and the Invitation "sufficiently meets the requirements
of law for a 'Best Value' procurement solicitation." The
circuit court further found the allegations that the School
Board's actions were arbitrary or capricious "are conclusory
only and unsupported by allegations of fact and that there are
no allegations of dishonesty or corrupt actions" on the part of
the School Board.
II. School Board's Failure to Follow Requirements of Act
PBM asserts the circuit court erred in sustaining the
demurrer because its amended complaint adequately alleges the
School Board failed to properly follow the requirements of the
Act. "A demurrer tests the legal sufficiency of facts alleged
in pleadings, not the strength of proof." Glazebrook, 266 Va.
at 554, 587 S.E.2d at 591. "Whether a cause of action is
4
sufficiently pled is a legal issue which we review de novo."
TC MidAtlantic Dev., 280 Va. at 210, 695 S.E.2d at 547.
Pursuant to Code § 2.2-4303, which identifies the
"[m]ethods of procurement" to be used in awarding public
contracts, the contract was to be awarded after competitive
sealed bidding. Competitive sealed bidding "is a method of
contractor selection, other than for professional services."
Code § 2.2-4301. 4 Code § 2.2-4303(A) states that "[a]ll public
contracts with nongovernmental contractors for the purchase or
lease of goods, or for the purchase of services, insurance, or
construction, shall be awarded after competitive sealed
bidding, or competitive negotiation as provided in this
section, unless otherwise authorized by law." (Emphasis added.)
This section enumerates certain contracts that may be awarded
and purchases that may be made using competitive negotiation or
other methods of procurement. Code § 2.2-4303(B)-(J). The
School Board's contract does not fall within any of these
4
Professional services "means work performed by an
independent contractor within the scope of the practice of
accounting, actuarial services, architecture, land surveying,
landscape architecture, law, dentistry, medicine, optometry,
pharmacy or professional engineering. 'Professional services'
shall also include the services of an economist procured by the
State Corporation Commission." Code § 2.2-4301. The parties
agree that custodial services are not professional services as
defined by the Act.
5
subsections providing for a procurement method other than
competitive sealed bidding.
The process to be followed by the public body in procuring
a contract under the competitive sealed bidding process is set
forth in the Act and consists of the following elements:
1. Issuance of a written Invitation to Bid containing
or incorporating by reference the specifications and
contractual terms and conditions applicable to the
procurement. Unless the public body has provided for
prequalification of bidders, the Invitation to Bid
shall include a statement of any requisite
qualifications of potential contractors. . . .
2. Public notice of the Invitation to Bid at least 10
days prior to the date set for receipt of bids by
posting on the Department of General Services'
central electronic procurement website or other
appropriate websites. . . .
3. Public opening and announcement of all bids
received.
4. Evaluation of bids based upon the requirements set
forth in the invitation, which may include special
qualifications of potential contractors, life-cycle
costing, value analysis, and any other criteria such
as inspection, testing, quality, workmanship,
delivery, and suitability for a particular purpose,
which are helpful in determining acceptability. 5
5
In evaluating the bids under this element, the public
body "shall determine whether the apparent low bidder is
responsible." Code § 2.2-4359(A). If the public body
determines the apparent low bidder is not responsible, it must
notify the bidder who is permitted to inspect the documents
related to the determination and submit rebuttal information.
The public body must issue a written determination of
responsibility taking into account the rebuttal information.
Code § 2.2-4359(A)(1)-(3). The School Board did not notify PBM
6
5. Award to the lowest responsive and responsible
bidder. . . . 6
Code § 2.2-4301 (emphasis added). Therefore, under the plain
language of the Act, the School Board was required to award the
contract to the lowest responsive and responsible bidder.
We reject the School Board's position that its utilization
of best value concepts permitted it to award the contract to
the best value bidder instead of the lowest responsive and
responsible bidder. 7 Although the Act permits public bodies to
"consider best value concepts when procuring goods and
nonprofessional services," Code § 2.2-4300, it does not provide
the School Board with a method of procurement in lieu of
competitive sealed bidding. See Code § 2.2-4303(C). 8 To accept
that it was determined to be not responsible pursuant to the
provisions set forth in this section.
6
A responsive bidder is a "person who has submitted a bid
that conforms in all material respects to the Invitation to
Bid." Code § 2.2-4301. PBM asserts its bid conformed in all
material respects to the Invitation and was, therefore,
responsive. The School Board has not contended otherwise.
7
" 'Best value,' as predetermined in the solicitation,
means the overall combination of quality, price, and various
elements of required services that in total are optimal
relative to a public body's needs." Code § 2.2-4301.
8
The only provision in the Act which expressly permits a
public body to award the contract to the best value bidder is
Code § 2.2-4308, which applies to design-build or construction
management contracts and provides that a fixed price or not-to-
exceed price design-build or construction management contract
for public bodies other than the Commonwealth "shall be awarded
to the fully qualified offeror who submits an acceptable
proposal determined to be the best value" if the public body
7
the School Board's position, we would have to add language to
the fifth element of competitive sealed bidding set forth in
Code § 2.2-4301 by providing for an award to the best value
bidder as an alternative to the lowest responsive and
responsible bidder. We cannot change or amend legislative
enactments in this manner. See, e.g., Coca-Cola Bottling Co.
of Roanoke, Inc. v. County of Botetourt, 259 Va. 559, 565, 526
S.E.2d 746, 750 (2000).
In addition to PBM's claim that the School Board failed to
award the contract to the lowest responsive and responsible
bidder, PBM asserts that the School Board's consideration of
best value criteria did not comply with the Act. For example,
PBM alleges that at the second meeting between representatives
from PBM and the School Board, PBM was informed that two
reasons it was not the successful bidder were PBM's failure to
address how a transition from its existing janitorial company
to PBM would be handled and its failure to explain how
background checks would be undertaken. According to PBM, these
factors were not included in the Invitation criteria. PBM also
contends the Invitation did not identify factors that would be
considered in how points were allocated among the bid criteria
complies with the requirements of this section. Contracts
awarded pursuant to this section are specifically identified in
Code § 2.2-4303(D)(4) as exceptions from the required
competitive sealed bidding method.
8
or how points would be awarded to bidders. Under the Act, the
criteria and basis for evaluating bids must be stated in the
Invitation and the evaluation of the bids must be in accordance
with such criteria. See Code § 2.2-4300(C) ("The criteria,
factors, and basis for consideration of best value and the
process for the consideration of best value shall be as stated
in the procurement solicitation."); Code § 2.2-4301 (evaluation
of the bids must be "based upon the requirements set forth in
the invitation").
In sum, the circuit court erred in finding that PBM does
not adequately allege the School Board failed to properly
follow the requirements of the Act. Since the Act requires the
School Board to award the contract to the lowest responsive and
responsible bidder and to describe the criteria used to
evaluate the bid in its Invitation, PBM's claims that the
School Board failed to comply with these requirements
sufficiently plead a cause of action under the Act. See Code
§ 2.2-4364(C)(ii)(circuit court may reverse award that is not
in accordance with law and the terms and conditions of the
Invitation).
III. School Board's Arbitrary or Capricious Actions
PBM also assigns error to the circuit court's ruling that
its amended complaint alleges insufficient facts of arbitrary
or capricious conduct. "We have defined an act as arbitrary
9
and capricious when it is willful and unreasonable and taken
without consideration or in disregard of facts or law or
without determining principle, or when the deciding body
departed from the appropriate standard in making its decision."
James v. City of Falls Church, 280 Va. 31, 42, 694 S.E.2d 568,
574 (2010) (internal quotation marks and citations omitted).
PBM contends that during its first meeting with
representatives from the School Board, it was informed the only
reason it was not the successful bidder was because it failed
to adequately describe the supplies and equipment that would be
used despite the fact that PBM provided its plan to offer a
unique program for use of "green seal certified" cleaning
products and "first class equipment" to promote the health and
safety of children and employees. During the second meeting,
the School Board told PBM it was determined to be not
responsible even though the School Board did not notify PBM of
this determination or otherwise follow the procedures set forth
in Code § 2.2-4359(A)(1)-(3). 9 In addition, the School Board
informed PBM, for the first time, that it failed to adequately
address its transition plan and how background checks would be
undertaken, factors that were not included in the criteria set
forth in the Invitation. During this meeting, the School Board
9
The School Board subsequently retracted its prior
statement that PBM was not responsible.
10
was unable to articulate the factors considered in how the
points were allocated or how the points were awarded.
PBM further alleges that the points given to PBM for
certain criteria specified in the Invitation had no basis in
fact. Although PBM provided detail regarding its 36 years of
experience in the janitorial industry, specifically including
its prior experience in another public school system, it was
awarded only 26.63 out of 50 points, ranking PBM 8th out of 9
bidders, and was not told that lack of experience caused it to
be an unsuccessful bidder. In addition, PBM alleges that
despite its plan for using "green seal certified" cleaning
products and "first class equipment," it was awarded only 2 out
of 5 points for cleaning and supplies.
In sum, PBM alleges the School Board willfully disregarded
the fact that PBM submitted the lowest bid and failed to either
award the contract to PBM or determine that it was not
responsible as required by the Act. PBM alleges that certain
scores it was given had no basis in fact and did not bear a
rational relationship with the information provided in its bid.
It also alleges the School Board was unable to explain how
points were awarded for each of the criteria and that the
explanations given by the School Board as to why PBM was not
the successful bidder departed from the criteria provided in
the Invitation. These allegations are not merely conclusory
11
and sufficiently state a cause of action under the Act. Code
§ 2.2-4364(C)(i)(circuit court may reverse award that is not an
honest exercise of discretion, but instead is arbitrary or
capricious).
IV. Conclusion
For the foregoing reasons, we conclude the circuit court
erred in sustaining the School Board's demurrer to the amended
complaint. Accordingly, we will reverse the judgment of the
circuit court and remand for further proceedings consistent
with this opinion.
Reversed and remanded.
JUSTICE MIMS, concurring.
I concur with the majority that the demurrer of the School
Board should be overruled. However, I take a different
analytical path to reach that conclusion.
The majority correctly recites the competitive sealed
bidding process by which a public body generally must procure
goods and services. The bedrock principle of that process is
that the award must be to the lowest responsive and responsible
bidder. However, in 2000, the General Assembly carved out
certain contracts that may be awarded using a novel concept
12
identified as “best value.” 1 Yet because this new concept is
imperfectly grafted into the time-honored statute and its well-
understood principles of “responsive” and “responsible,” public
bodies, potential bidders and courts must grapple with what the
General Assembly intended and how “best value” is to be applied
in the real world of public contracting.
The statute, by allowing best-value methodology while
still requiring that the contract be awarded to the lowest
bidder, is contradictory and ambiguous. In ascertaining the
statute’s meaning, we therefore may “resort to rules of
construction, legislative history, and extrinsic evidence.”
Doss v. Jamco, Inc., 254 Va. 362, 370, 492 S.E.2d 441, 466
(1997).
I begin, as courts must, with the proposition that the
General Assembly, in enacting the best-value legislation,
intended to make a substantive change in the law. See Dale v.
City of Newport News, 243 Va. 48, 51, 412 S.E.2d 701, 702
(1992) (“there is a presumption that a substantive change in
law was intended by an amendment to an existing statute”).
Under the prior law of competitive sealed bidding, the bid with
1
The 2000 amendment states: “ ‘Best value,’ as
predetermined in the solicitation, means the overall
combination of quality, price, and various elements of required
services that in total are optimal relative to a public body’s
needs.” 2000 Acts ch. 644.
13
the lowest price by a responsive and responsible bidder was
awarded the contract. See former Code § 11-37 (1999 Repl.
Vol.). That statute provided, as does the current one, for
“[e]valuation of bids based upon the requirements set forth in
the invitation, which may include special qualifications of
potential contractors, life-cycle costing, value analysis, and
any other criteria such as inspection, testing, quality,
workmanship, delivery, and suitability for a particular
purpose, which are helpful in determining acceptability.” Id.
Thus, the former statute allowed the public body to promulgate
criteria that would ensure that the lowest bidder met its
specialized needs.
The amendment to the statute suggests that the legislature
intended to permit public bodies to go beyond those criteria
and use a modified competitive sealed bidding process to award
contracts based upon a variety of bid factors in addition to
price. But because the best-value concept was imperfectly
grafted into the statute, a question remains: are those
unsuccessful bidders in best-value procurements less responsive
or are they non-responsible? 2 The briefs and argument in this
case, and the majority opinion, highlight this dilemma.
2
A finding of non-responsibility in one procurement may
have negative consequences for the bidder in subsequent
procurements.
14
We must read the underlying statute and the 2000 amendment
as an integrated whole. Alston v. Commonwealth, 274 Va. 759,
769, 652 S.E.2d 456, 462 (2007) (statutes “should be so
construed as to harmonize the general tenor or purport of the
system and make the scheme consistent in all its parts and
uniform in its operation, unless a different purpose is shown
plainly or with irresistible clearness”) (quoting Prillaman v.
Commonwealth, 199 Va. 401, 405, 100 S.E.2d 4, 7 (1957)). In so
doing, I would hold that the best-value analysis does not
implicate the responsibility of a bidder, but rather alters the
traditional responsiveness prong. In other words the “most
responsive” responsible bidder in a best-value procurement is
not necessarily the one with the lowest-priced bid. This is
where I part company with the majority, which holds that the
plain meaning of the Act, even in a best-value procurement,
requires the contract to be awarded “to the lowest responsive
and responsible bidder.” (Emphasis added.) If that is so, the
best-value amendment is stripped of any substantive meaning.
I must conclude that a best-value procurement is
fundamentally inconsistent with traditional procurement
principles relying solely on an objective “lowest responsive”
15
bidder determination. That appears to be what the General
Assembly intended. 3
I concur with the conclusion of the majority that the
School Board’s actions as alleged in the complaint were
arbitrary and capricious and did not comply with the distinct
best-value statutory mandate. Because the best-value concept
decouples the decision to award from the determination of the
lowest-priced responsive bid by a responsible bidder – an
easily determined, objective two-step determination – the
statute includes certain protections to guard against excessive
subjectivity: “The criteria, factors, and basis for
consideration of best value and the process for the
3
While not authoritative, it is worth noting that the
Department of Planning & Budget, in its Fiscal Impact Statement
to a subsequent proposed amendment to the VPPA, described best-
value as
“permit[ting] public bodies to rely on factors
other than price when procuring goods and
nonprofessional services. By relying upon these
other factors when making their procurement
decisions, public bodies have the flexibility to
purchase the product that best suits their
needs, rather than the cheapest product that
meets their needs. Ultimately, such choices
should improve the quality of government
purchases and reduce these purchases’ lifetime
costs.”
Department of Planning and Budget, 2001 Impact Statement for HB
1931, available at http://leg1.state.va.us/cgi-
bin/legp504.exe?011+oth+HB1931F122+PDF (last visited April 9,
2012) (emphasis added).
16
consideration of best value shall be as stated in the
procurement solicitation.” Code § 2.2-4300(C).
Professional Building Maintenance Corporation’s Complaint
sufficiently alleges an arbitrary and capricious process and
non-compliance with this statutory requirement. For both of
these reasons, the Complaint is sufficient and the demurrer
should be overruled.
17