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Alaska Structures, Inc. v. Dep't of General Services

August 24, 2009

ALASKA STRUCTURES, INC., PETITIONER
v.
DEPARTMENT OF GENERAL SERVICES, RESPONDENT



The opinion of the court was delivered by: President Judge Leadbetter

SUBMITTED: April 24, 2009

BEFORE: HONORABLE BONNIE BRIGANCE LEADBETTER, President Judge, HONORABLE ROBERT SIMPSON, Judge, HONORABLE ROCHELLE S. FRIEDMAN, Senior Judge.

OPINION

Alaska Structures, Inc. (Alaska Structures) petitions for review of the November 3, 2008 order of the Deputy Secretary of the Department of General Services for Administration and Procurement, denying Alaska Structures' protest challenging the award of a contract by the Department of General Services (DGS) to EMS Innovations, Inc. (EMS) for the purchase of eight fifty-bed mobile/portable hospital system units, which are capable of being dispatched to disaster sites for emergency medical care.*fn1

Alaska Structures challenges the Deputy Secretary's determination that DGS procured the units through "cooperative purchasing" pursuant to Section 1902 of the Commonwealth Procurement Code (Procurement Code), as amended, 62 Pa. C.S. § 1902, not as an "emergency procurement" under Section 516 of the Procurement Code, 62 Pa. C.S. § 516. Alaska Structures also questions DGS' authority to procure the units pursuant to Section 1902 of the Procurement Code and to issue an "emergency" purchase order to encumber and preserve the federal grant before expiration of the grant period. After careful review of the record and the relevant provisions of the Procurement Code and the federal acquisition regulations, the Court concludes that Alaska Structures' arguments are without merit and must be rejected.

I.

The record reveals the following relevant facts.*fn2 In September 2006, the United States Department of Health and Human Services (HHS) awarded the Pennsylvania Department of Health, Office of Public Health Preparedness, a federal grant in the amount of $18,776,677 for a "Bioterrorism-Hospital Preparedness Program." Reproduced Record (R.R.) at 224a. In November 2007, HHS extended the 12-month grant period to August 31, 2008, and increased the grant amount to $21,556,281 to provide supplemental funding for "Pandemic Influenza, Medical Surge Capacity and Capability." R.R. at 240a. In March and May 2008, the Department of Health sought HHS' permission to redirect the grant funds "to purchase eight 50-bed mobile hospitals" and also requested further extension of the grant period to August 31, 2009. R.R. at 244a and 257a.

In June 2008, DGS' Bureau of Procurement (Bureau) denied the Department of Health's request that the portable hospital system units be purchased through a no-bid, sole source procurement. The Bureau then issued an Invitation for Bids to procure eight portable hospital system units on behalf of the Department of Health. After Alaska Structures filed a protest raising ambiguities in the Invitation for Bids, the Bureau cancelled the Invitation and denied Alaska Structures' protest as moot on August 8, 2008. In the meantime, HHS issued a notice of award on July 15, 2008, permitting the Department of Health to redirect the funds "towards the purchase of mobile medical facilities" and extending the grant period to August 31, 2009 for "PANDEMIC INFLUENZA SUPPLEMENTAL FUNDS ONLY." R.R. at 261a (emphasis in original).

After canceling the Invitation for Bids, the Bureau investigated the possibility of purchasing the portable hospital system units through the Federal Disaster Recovery Purchasing Program administered by the General Services Administration (GSA). Under that program, state and local governments are authorized to procure products, services and construction necessary to facilitate recovery from a major disaster, terrorism or nuclear, biological, chemical, or radiological attack from contractors listed in the GSA Schedules, including the Federal Supply Schedule 84 (Schedule 84) ("Total Solutions for Law Enforcement, Security, Facilities Management, Fire, Rescue, Clothing, Marine Craft, and Emergency/Disaster Response").

On August 12, 2008, the Bureau requested a quote for eight fifty-bed portable hospital system units from three contractors listed in Schedule 84: First Line Technology, Global Protection and EMS.*fn3 First Line Technology declined to submit a quote. On August 15, 2008, Global Protection and EMS each submitted a quote in the amount of $6,642,555.79 and $3,712,525.28, respectively. Determining, in conjunction with the Department of Health, that EMS' quote was the best value, the Bureau prepared a purchase order. At that time, the Bureau believed that it was unlikely to obtain approval of the purchase order from the Office of General Counsel and the Office of Attorney General before the grant period expired on August 31, 2008. The Bureau accordingly issued an "emergency" purchase order on August 28, 2008, to encumber and preserve the federal funds before the grant period expiration.

Alaska Structures timely filed a protest, alleging, inter alia, that DGS limited bid competition by failing to request a quote from Alaska Structures and that the issuance of the "emergency" purchase order was not justified under Section 516 of the Procurement Code. Section 516 authorizes "an emergency procurement when there exists a threat to public health, welfare or safety or circumstances outside the control of the agency create an urgency of need which does not permit the delay involved in using more formal competitive methods." [Emphasis added.] The Bureau stayed the procurement proceeding pending Alaska Structures' protest.

The Deputy Secretary denied Alaska Structures' protest. She distinguished "the method of award of the purchase order" and "the method of issuance of the purchase order." Deputy Secretary's November 3, 2008 Decision at 3. She stated that the method of award utilized by the Bureau to purchase the portable hospital system units "was procurement from a [GSA] Federal Supply Schedule" pursuant to Section 1902 of the Procurement Code. Id. She determined that DGS properly issued the emergency purchase order to prevent the Department of Health from losing the federal funds due to expiration of the grant period on August 31, 2008. Alaska Structures appealed the Deputy Secretary's decision to this Court. DGS subsequently issued a non-emergency purchase order and notified Alaska Structures' counsel that the second order had been fully executed, approved and sent to EMS and that the order "supersede[d] and terminate[d]" the previous emergency purchase order. R.R. at 456a.

II.

Alaska Structures first argues that DGS procured the units as an "emergency procurement" without circumstances justifying such procurement under Section 516 of the Procurement Code. Alaska Structures asserts that DGS should not be permitted to invoke Section 516 when any urgent need for emergency procurement was solely due to its poor procurement planning. DGS counters that the procurement was made through cooperative purchasing under Section 1902 of the Procurement Code, not as an "emergency procurement" under Section 516. While conceding that "the federal government extended the deadline for expenditure of the federal grant monies until August 2009," DGS' Brief at 14, DGS ...


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