Notice of Appeal

STATE OF NEW MEXICO COUNTY OF SANTA FE FIRST JUDICIAL DISTRICT

AMERICAN INSTITUTES FOR RESEARCH,

Plaintiff/Appellant,

vs. No.

LAWRENCE MAXWELL, as State Purchasing Agent; NEW MEXICO PUBLIC EDUCATION DEPARTMENT,

Defendants/Appellees.

NOTICE OF APPEAL FROM July 2, 2014, DECISION ON PROTEST OF REQUEST FOR PROPOSALS #40-000-12-00027

FOR OPERATIONAL ASSESSMENTS

Pursuant to the State of New Mexico Procurement Code, NMSA 1978, 13-1-183,

NMSA 1978, 39-3-1.1, and Rule 1-074 NMSA, Appellant/Petitioner American Institutes for

Research (AIR), by and through its undersigned counsel, hereby submits its Notice of Appeal

of the State Purchasing Agents July 2, 2014, decision on AIRs pre-award protest of Request for

Proposals # 40-000-12-00027 (the RFP) for The Partnership for Assessment and Readiness for

College and Careers (PARCC) Operational Assessments, attached as Exhibit A (the Protest

Decision). Though AIR believes the entire procurement was flawed for the reasons noted in its

pre-award protest and stated herein, AIR has no objection with the New Mexico Public

Education Departments moving forward with year one so that PARCC is not prevented from

moving forward in any way. In support of its Appeal, AIR states as follows:

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I. PARTIES

1. Appellant American Institutes for Research (AIR) is a not-for-profit behavioral

and social science research organization that applies science to address issues in a wide range of

areas, including student assessment. AIRs principal place of business is Washington, D.C. AIR

is an interested party that would have submitted a proposal for all or the majority of work

contemplated by the RFP, attached hereto as Exhibit B, but for the anticompetitive, overly

restrictive, and unlawful specifications in the RFP, and but for the other ways this procurement

violated New Mexico law. Based on the flaws in the RFP and the attendant procurement

process, AIR filed a pre-award protest on December 11, 2013, fifteen days after learning the

facts giving rise to its protest and prior to the deadline for proposal submission, in compliance

with both the RFP and the procurement statutes. A copy of AIRs pre-award protest is attached

as Exhibit C (the Protest). After a dispute about the timeliness of AIRs protest filing and a

determination by this Court that the Protest was timely filed and that the State Purchasing Agent

(the SPA) must consider the Protest on the merits, the SPA denied the Protest on July 2, 2014.

See Exhibit A. AIR brings this Notice of Appeal of the Protest Decision.

2. Appellee Lawrence Maxwell is the State Purchasing Agent for the State of New

Mexico. On May 27, 2014, this Court directed the SPA to rule on the merits of the Protest,

which the SPA did on July 2, 2014, dismissing or denying each of AIRs claims. See Exhibit A.

The SPAs office is located in Santa Fe, New Mexico.

3. Appellee New Mexico Public Education Department (PED) is an administrative

agency of the government of the State of New Mexico procuring operational assessments

through the RFP. The PEDs principal office is located in Santa Fe, New Mexico.

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II. NOTICE OF APPEAL

4. AIR incorporates paragraphs 1 through 3 as if fully stated herein.

5. This Court has jurisdiction to hear and determine this Appeal pursuant to NMSA

1978, 13-1-183, and NMSA 1978, 39-3-1.1. This Court also has jurisdiction over this

Appeal pursuant to this Courts May 31, 2014, Order in Case No. D-101-CV-2014-00138,

stating that [p]ursant to NMRA 1-074(T), once the SPA has issued its written determination on

the merits of AIRs protest, the matter will once again be ripe for judicial review by this Court if

necessary. See Exhibit D.

6. On December 11, 2013, fifteen days after learning certain facts about the PEDs

procurement for operational assessments on behalf of PARCC under the RFP, AIR submitted the

Protest alleging that (i) the RFP unlawfully restricted competition by including a number of

specifications that heavily favored one particular vendor and effectively precluded competition

by requiring the use of one vendors proprietary system, bundling certain requirements, and

forcing interested vendors to base proposals on yet-to-be-determined requirements, (ii) PARCC,

the consortium on behalf of which the PED issued the solicitation, had an irreparable conflict of

interest, and (iii) the PED structured the RFP as a cooperative procurement but then failed to put

in place the requisite cooperative procurement agreements. See Exhibit C at 6-13.

7. On December 23, 2013, the SPA denied the Protest as untimely filed. See Exhibit

E.

8. AIR appealed the SPAs untimeliness determination to this Court, and on May 27,

2014, the Court reversed the SPAs decision and remanded the case for a determination of the

merits of the Protest. See Exhibit D.

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9. On June 2, 2014, the SPA issued a letter setting forth the protest adjudication

process and schedule. See Exhibit F. The SPA permitted the PED and NCS Pearson (Pearson)

the vendor that AIR alleged had an unfair advantage and that had been awarded the contract

during the pendency of the appeal of the timeliness issue to respond to the Protest by June 18,

2014,1 and then provided AIR an opportunity to reply to the PEDs and Pearsons responses by

June 25, 2014. Id.

10. The SPA did not invite any other vendors to respond to AIRs protest.

11. The PED and Pearson each responded to the Protest on June 9, 2014. See Exhibit

G (PED Response); Exhibit H (Pearson Response).

12. AIR filed its Reply to the PEDs and Pearsons responses on June 25, 2014. See

Exhibit I.

13. On July 2, 2014, the SPA issued its decision on the Protest. See Exhibit A. It

determined: first, that AIR did not have standing because it failed to submit a proposal in

response to the RFP it was protesting, see id. at 2; second, that the RFP was not a cooperative

procurement, and thus that the PED did not err by failing to execute the statutorily required

cooperative procurement agreements, id. at 3-5; third, that the RFP did not require vendors to use

Pearsons proprietary content delivery platform (CDP) for the first year of the contract, but

rather permitted contractors to propose and use their own CDP for year one, and thus that the

RFP did not unlawfully favor Pearson, id. at 5-7; and fourth, that the PED did not have to

unbundle test development and administrative assessment to promote competition because the

1 Notably, the SPA invited Pearson to submit a response to AIRs protest because it considered

Pearson to be a party in interest, even though at the time AIR submitted the Protest long before award of the contract Pearson was no more an interested party than any other prospective bidder.

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PED determined that it was more efficient to conduct the procurement as currently bundled, id.

at 7-9. The SPA dismissed AIRs conflict of interest protest ground as not ripe in a footnote. Id.

at 3, n.1.

14. This Notice of Appeal is timely filed, as it is being filed within 30 days after the

date of the Protest Decision. Rule 1-074 NMSA; see also NMSA 1978, 39-3-1.1.

15. AIR is an aggrieved party within the meaning of NMSA 1978, 39-3-1.1(C), as

the SPAs decision denying the Protest denies AIR the opportunity to compete for a multi-year

contract worth potentially over one billion dollars,2 and denies AIR the opportunity to participate

in a procurement that complies with New Mexico law. AIR would have submitted a proposal

but for the fundamental flaws in the RFP that AIR raised in its protest, flaws that rendered the

procurement anticompetitive and contrary to New Mexico law, and effectively prevented AIR

from submitting a proposal.

III. STATEMENT OF FACTS


17. PARCC is a consortium of states working together to develop a common set of K-

12 assessments that measure whether students are on track to be successful in college and their

careers. The membership of PARCC has varied somewhat over the years. PARCC, Inc. is a

non-profit corporation established to support the PARCC consortium, including the procurement

of goods and/or services from outside vendors for the benefit of the PARCC member states such

as the RFP in question.

2 The estimated overall value of the contract is determined by multiplying $25 (the approximate

cost per student) against 6,000,000-10,000,000 students (the range set by the RFP in its volume pricing requirement, see Exhibit B at 88) against 4-8 years (the base contract of four years plus up to four additional option years, see id. at 13).

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18. PARCC drafted the bulk of the specifications for the RFP issued by the State of

New Mexico.

19. The PED issued the RFP on November 14, 2013, and emailed a copy of the RFP

to multiple vendors at the time of issuance.

20. The RFP is structured as a PARCC procurement and is drafted to address the

assessment needs of all of PARCC member states. For example, New Mexicos total student

population for the 2013-14 school year was 339,219 in grades K-12, but the RFP required

vendors to quote prices for three student population scenarios ranging from a minimum of

6,000,000 students to a maximum of 10,000,000 students. The RFP also contains provisions

providing for a range of services that go well beyond New Mexicos requirements, including

specific and detailed scoring requirements for the State of New York.3

21. The PED itself confirmed in writing, through the RFP Questions and Answers

attached hereto as Exhibit J (the RFP Q&A), that the RFP was intended to produce a contract

through which assessment services would be provided in PARCC member states other than New

Mexico.4

22. PARCC has also stated, in its own press release, its understanding that the RFP

was issued by New Mexico on behalf of the PARCC member states.5

23. The evaluation committee for the procurement consisted of thirteen members,

only two of whom were from New Mexico. The remaining eleven members were from other

PARCC member states.

3 See Exhibit B at 129.

4 See Exhibit J at Q36. See Argument 64-69.

5 See Release: PARCC Releases RFP for Operational Services, Nov. 19, 2013, available at

www.parcconline.org/parcc-releases-rfp-operational-assessments.

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24. Prior to release of the RFP, PARCC consulted with other consortium states to

ensure that the specifications in the New Mexico RFP satisfied each states individual needs.

25. While the SPA asserted that the RFP did not require the successful offeror to use

Pearsons CDP, the public record and Pearsons own proposal belie that assertion.

26. While vendors were asked to include pricing and specifications for their own

content delivery platforms in their proposals, the PED made clear that this was only for

contingency purposes and that the plan was to use the CDP vendors platform for the first

operational year.6

27. Publicly available documents confirm that Pearson is the CDP vendor for the first

year of this contract. Specifically, in an October 2012 RFP issued by the State of Indiana on

behalf of PARCC, Pearson was hired to create the test forms that would be used in PARCCs

assessment program and to administer the field testing of such items. The Indiana RFP expressly

provided that PARCC will administer the Field Test and the first Operational Assessment on the

same platform.7 In other words, PARCC is committed to using Pearsons content delivery

platform for the first year of operational assessment.

28. In addition, in two separate submissions made in December 2013 after issuance

of the RFP but prior to the proposal deadline PARCC made clear that it was using Pearsons

proprietary CDP for the first year of operational assessments.8

29. PARCC published on its website and distributed guidance to PARCC member

states in September 2013 that stated Pearsons proprietary CDP would be used for the first year

6 See Argument at 81-82

7 See Indiana PARCC Field Test RFP 13-29, Attachment E, at 50.

8 See Exhibit K (PARCC Response to Arizona Request for Information), at 27-28; see also

Exhibit L (PARCC Proposal to Florida) at 26-28.

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of operational assessments: "Web browser requirements for the PARCC Field Test and the

2014-2015 operational assessments are driven by browser compatibility with the Pearson

TestNav 8 assessment delivery platform."9 TestNav is Pearsons proprietary CDP.

30. Pearsons proposal in response to the RFP showed clear understanding that

Pearsons proprietary CDP was required by the RFP, stating In the first operational year (2014-

15), PARCC will use PearsonAccess and TestNav systems.10

31. PARCC and Pearson have submitted responses for assessment work in other

states, and each has integrated the other into its offers.

32. For example, PARCC submitted an offer to Florida in response to an RFP for a

five-year contract and an offer to Arizona in response to a Request for Information (RFI). In

both submissions, PARCC stated it intends to partner with Pearson to use Pearsons proprietary

content delivery platform, TestNav 8, as part of its proposed solution.11

33. Specifically, in both the December 4, 2013, offer to Florida, and the December

2013, response to an RFI issued by Arizona, PARCC stated that it is making available to

schools and districts a caching option known as Proctor Caching as part of the Pearson TestNav

8 delivery platform that PARCC will use for the first PARCC operational administration in

2014-2015.12 In its Florida response, PARCC was even more blunt, specifically referencing

Pearson as PARCCs assessment delivery platform provider, (emphasis added).13

9 Technology Guidelines for PARCC Assessments Version 3.0 September 2013 Update.

10 See Pearson Proposal in Response to RFP at Cost Narrative, p. 3.

11 See Exhibit K at 27-28; Exhibit L at 26-28.

12 See id.; see also Argument at 89.

13 See Exhibit L, at 26.

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34. In Pearsons response to the Arizona RFI, it proposed to help deliver or support a

number of assessment options, including the PARCC assessment.14 Pearsons response is

unique: no other vendor has been able to enter into an agreement with PARCC to offer the

PARCC assessment or to use the PARCC items.15

35. PARCC thus was itself competing for assessment work in Florida, and stating its

intent to compete in Arizona, using Pearsons proprietary content delivery platform at the same

time it was preparing the RFP and evaluating proposals for assessment work in New Mexico.

36. AIR filed the Protest of the RFP on December 11, 2013, within fifteen days of

learning the facts and occurrences giving rise to its protest.

37. On December 23, 2014, the SPA denied the Protest as untimely filed.

38. The deadline for submission of proposals in response to the RFP was December

30, 2013.

39. Pearson was the only vendor that submitted a proposal in response to the RFP.

40. AIR timely appealed the SPAs denial of the Protest as untimely filed.

41. The PED awarded the PARCC operational assessments contract to Pearson on

May 1, 2014, while AIRs appeal of the SPAs denial of the Protest as untimely filed was

pending, and prior to any determination of the merits of AIRs protest.

42. On May 27, 2014, this Court reversed the SPAs decision on AIRs Protest and

remanded the Protest back to the SPA for a determination on the merits. Exhibit D.

14 See Exhibit M (Pearson Response to Arizona Request for Proposal) at ES-1 ES-2.

15 Catherine Gewertz, Can Any State Use PARCC or Smarter Balanced Test Items?, Education

Week, Jun. 13, 2014.

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43. The SPA did not rule on the merits of the Protest until July 2, 2014, long after the

proposal deadline, and months after the PED awarded the operational assessments contract to

Pearson.

IV. ARGUMENT


45. The Protest Decision is arbitrary, capricious, not supported by substantial

evidence, and contrary to the governing law. The Protest Decision is based on an improper

reading of both the RFP and the New Mexico Procurement Code, and it ignores substantial

evidence in the record cited by AIR that contradicts its conclusions.

46. This appeal concerns contract and statutory construction and therefore this Court

reviews those aspects of the SPAs decision de novo. City of Albuquerque v. AFSCME Council

18 ex rel. Puccini, 2011-NMCA-021, 8, 149 N.M. 379, 381, 249 P.3d 510, 512 (N.M. Ct. App.

2011) ([w]hen reviewing an administrative agencys conclusions of law, the courts review de

novo).

47. This Court reviews the SPAs factual findings to determine whether they are

supported by substantial evidence. Id. (a court applies a substantial evidence test when

reviewing an agencys factual findings).

48. The New Mexico Procurement Code, NMSA 1978, 13-1-28 - 13-1-199, is

designed to protect the integrity of the procurement process. Its stated purposes are to provide

for the fair and equitable treatment of all persons involved in public procurement, to maximize

the purchasing value of public funds and to provide safeguards for maintaining a procurement

system of quality and integrity. NMSA 1978, 13-1-29. Indeed, [t]he Code and the

Procurement Manual are designed to preclude even the appearance of impropriety. See

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Planning & Design Solutions v. City of Santa Fe, 1994-NMSC-112, 25, 118 N.M. 707, 713,

885 P.2d 628, 634 (emphasis in original).

49. A protest of a solicitation that alleges that an RFP is anticompetitive and unlawful

is precisely the sort of protest the Procurement Code was designed to enable. It aims to provide

for the fair and equitable treatment of all persons involved in public procurement by ensuring

that no one vendor has an unfair advantage over any others, to maximize the purchasing value

of public funds by ensuring that there is true competition, and to maintain quality and

integrity in the procurement process by ensuring that all vendors have confidence that the

procurement is conducted in an upstanding fashion and is free of any impropriety . NMSA 1978,

13-1-29.

50. Though the PED has discretion to design an RFP that best meets its needs,

issuance of an anticompetitive RFP that violates the New Mexico Procurement Code constitutes

an abuse of discretion that is entitled to no deference at all and that this Court should not permit.

(1) The SPAs Determination that AIR Lacks Standing Was Arbitrary, Capricious, and Not Supported by the Governing Law.


52. The SPAs determination that AIR lacks standing to protest the RFP because it

did not submit a proposal in response to the solicitation it protested as unlawful is a legal

conclusion that this Court reviews de novo.

53. The SPA misinterprets the Procurement Code and the governing regulations, both

of which unquestionably permit vendors to protest a solicitation prior to award. The SPA based

its determination on NMSA 1978, 13-1-172, which provides that [a]ny bidder or offeror who

is aggrieved in connection with a solicitation or award of a contract may protest to the state

purchasing agent or a central purchasing office, and requires that the protest be submitted in

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writing within fifteen calendar days after knowledge of the facts or occurrences giving rise to the

protest. Because AIR did not submit an offer, the SPA determined that AIR was not an

offeror as defined in NMAC 1.4.17(B)(13) and the RFP.16 Accordingly the SPA ruled that

AIR did not have standing to protest. The SPAs analysis is a bizarre interpretation of New

Mexicos procurement statutes and regulations that leads to an arbitrary, capricious and unlawful

outcome.

54. Under the SPAs reading, a contractor has no standing to file a protest of a

solicitation if the fifteen day period for submitting a protest after learning the facts giving rise to

the protest concludes prior to the date of proposal submission. As the deadline for submitting a

protest of a solicitation is almost always before the deadline for submitting proposals, the SPAs

reading of the statute essentially eliminates the ability of a vendor to file a pre-award protest,

something the Procurement Code unquestionably permits.

55. In addition, this narrow construction eviscerates a contractors ability to protest a

sole source award, something New Mexico law expressly permits. Pursuant to NMAC 1.4.1.81,

[a]ny bidder or offeror who is aggrieved in connection with a solicitation or award of a contract,

including a sole source procurement, may protest to the state purchasing agent or central

purchasing office. Under the SPAs interpretation, if submission of an offer were a prerequisite

to filing a protest because this section uses the term bidder or offeror, the only contractor with

standing to protest a sole source award is the sole source awardee itself. Such a reading defies

logic.

56. The SPAs narrow interpretation requiring proposal submission as a prerequisite

to filing a protest would also provide an incentive for agencies to avoid judicial scrutiny through

16 Bidding is not applicable in the context of a request for proposals.

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administrative maneuvering and delay, as the SPA did here. In this case, the SPAs refusal to

consider AIRs protest on the merits or to amend the solicitation to eliminate the anticompetitive

provisions prior to the deadline for proposal submission effectively precluded AIRs

participation because submission of a proposal that could not comply with these overly

restrictive provisions would have been pointless.

57. Rather than issuing a determination on the merits of AIRs challenges, the SPA

denied AIRs protest based on an untimeliness argument that was later overturned by this Court.

As a result, none of the flaws that AIR raised in the Protest had been addressed by the proposal

submission deadline, thereby rendering AIRs submission of a proposal pointless. The

Procurement Code surely was not designed to allow agencies to engage in this kind of

gamesmanship.

58. Quite simply, it makes no sense and subverts the purpose of the protest rules

to require a protester to submit a proposal for an RFP that the protester cannot win due to the

flaws it is protesting.

59. In addition, AIRs protest is challenging what is effectively a de facto sole source

award in violation of NMSA 1978, 13-1-126(E) and NMAC 1.4.1.54(G).17 Pursuant to

1.4.1.54(G), [a]ny qualified potential contractor who was not awarded a sole source contract

may protest to the state purchasing agent or a central purchasing office. Under this provision,

AIR did not have to first submit an offer to protest this de facto sole source award, and the SPAs

contrary conclusion falls apart.

17 See Argument at 75.

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60. Finally and interestingly, while the SPA initially rejected the timeliness of AIRs

protest in its decision of December 23, 2013,18 it did not question AIRs standing to protest the

RFP even though AIR had not submitted a proposal at that time. The fact that the SPA raised

this issue only after this Court reversed the SPAs determination on timeliness and ordered the

SPA to consider AIRs protest on the merits is inconsistent at best. Upholding the SPAs

decision on standing would deny AIR the right of judicial review to which it is entitled pursuant

to both the Procurement Code and this Courts earlier decision.

61. In short, to uphold the SPAs construction of New Mexicos procurement law in

this instance would not only flip the interpretive principle stated by this Court that competitive

procurement rules are to be strictly construed against the soliciting entity but would render

meaningless the very provisions that were intended to serve as a check against violations of such

rules.

62. For the foregoing reasons, the SPAs decision that AIR lacks standing because it

did not submit a proposal in response to the challenged RFP is arbitrary, capricious, and contrary

to the governing law, and must be set aside.

(2) The SPAs Decision that This Was Not a Cooperative Procurement Was Arbitrary, Capricious, and Not Supported by Substantial Evidence.


64. The SPAs determination that this was never a cooperative procurement,19 is

arbitrary, capricious, and not supported by substantial evidence. Indeed, the evidence in the

record overwhelmingly contradicts the SPAs determination.

18 See Exhibit D.

19 See Exhibit A at 3.

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65. The SPA maintains that the RFP was not meant to establish a cooperative

procurement under New Mexico law, but rather a statewide price agreement that could be used

not only by New Mexico entities but also by any other state that cared to leverage the agreement

in accordance with their own state law.20 The SPA further concludes that [t]he only party to

this procurement and the only entity to which any obligation is created, is the New Mexico

PED.21 In other words, because the requisite cooperative procurement agreements were not in

place, this was not a cooperative procurement.22 The SPAs holding ignores the overwhelming

factual evidence that PARCC and the PED drafted the RFP not only to provide other PARCC

member states with the opportunity to purchase assessment services at an agreed-upon price, but

also to lay the groundwork for that opportunity by ensuring that the RFP included the

requirements of those other states.

66. Under New Mexico law, a cooperative procurement, which must be conducted

pursuant to NMSA 1978 13-1-135, is defined as a procurement conducted on or behalf of

more than one state agency or local public body, or by a state agency or local public body with

an external procurement unit. NMSA 1978, 13-1-44. An external procurement unit is

defined as any procurement organization not located in this state which, if in this state, would

qualify as a state agency or local public body. NMSA 1978, 13-1-56. Pursuant to this

definition, Boards of Education or Departments of Education in other states qualify as external

procurement units. As the SPA describes, [t]he essence of a cooperative procurement is that

one agency enters into the procurement by or on behalf of another entity to arrive at a common

20 Id. at 3.

21 Id. at 5.

22 See Id. at 4-5.

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contractual arrangement.23 That is precisely what was intended in this case (and would have

resulted), but for the PEDs failure to enter into the requisite cooperative procurement

agreements.

67. While the procurement resulting from the RFP may be denoted a price

agreement, that does not signify that the PED did not intend to conduct this as a cooperative

procurement. Indeed, the record is replete with evidence that the RFP was issued by New

Mexico on behalf of the PARCC member states and was intended to go well beyond negotiating

statewide volume pricing that any other state may leverage if it so chose. This evidence

includes RFP provisions concerning both pricing and assessment criteria. The evidence also

includes statements made by the PED in the RFP Q&A, and by PARCC in its own press releases.

This evidence includes:

a. The RFP Scope of Work explains that the assessment resulting from this RFP

will serve as the primary large-scale summative assessment in consortium states

in the 2014-2015 school year and thereafter. Exhibit B at 88 (emphasis added).

b. The RFP requires vendors to price three total consortium population scenarios:

approximately 6 million, 8 million, and 10 million tested students. Offerors shall

use these data to prepare a cost proposal for each population scenario. Exhibit B

at 88 (emphasis added). New Mexicos total student population for the 2013-

2014 school year was 339,219 students in all grades, and even fewer in the grades

tested under this RFP. Thus the smallest scenario that the RFP requires vendors

to price depends on at least fifteen times the student population of New Mexico

alone. Indeed, the awarded contract contains no price if the number of students

23 Exhibit A at 4.

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falls below 5.5 million, but rather requires that a price for a smaller number of

students must be separately negotiated. In other words, if the vendor were to

provide services only to New Mexico, the most critical contract term price

would need to be negotiated separately from this contract. If the RFP was not a

cooperative procurement and instead was just a price agreement, the RFP was

fatally flawed because it could not yield a price for New Mexico alone or for any

state alone. No current PARCC member state has anywhere near 6 million

students to test by itself. Only if virtually all of the PARCC member states agree

to join this contract can PARCC reach the 6 million students minimum stated in

the RFP.

c. The scope of work contains special scoring requirements for New York,

requirements that would be unnecessary if this procurement were for New Mexico

alone.24

d. In the RFP Q&A, one vendor asked: Has the State entered into a cooperative

procurement agreement with any other state or states and, if so, please identify

the state or states and provide a copy of the agreement(s).25 In response, the

PED stated:

Memorandum of Understanding (MOUs) are in place between the PARCC Consortium states, under which they have made commitments to administer the PARCC assessment system in their states. No specific cooperative agreements have yet been executed. It is anticipated that other PARCC Consortium states will make cooperative purchases under the contract awarded by New Mexico, placing direct orders with the contracted vendor under the

24 Exhibit B at 129 (emphasis added).

25 Exhibit J at Q7.

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terms of the contract, or otherwise make direct purchases under comparable contract terms, such as through sole source arrangements.26

e. Also in the RFP Q&A, one vendor asked: Is this RFP intended to result in an

actual contract to provide the requested services for any state other than New

Mexico (e.g., the constituent Partnership states)?27 The PED responded,

Yes.28 This too directly contradicts the SPAs statement that this was merely a

price agreement and not a cooperative procurement on behalf of the PARCC

member states.

f. Also in the questions and answers, a vendor asked: Is this RFP intended simply

to gather a price quote for the services described in the RFP so that states who are

consortia members can prepare state level RFPs for the services they wish to

procure? If not, can you please clarify the intent of the RFP?29 In response, the

PED stated: No. This RFP is intended to procure services for New Mexico and

other Partnership states to provide PARCC Operational Assessments.30 This

too directly contradicts the SPAs statement that this was merely a price

agreement and not a cooperative procurement on behalf of the consortium states.

g. The evaluation committee for the RFP consists of thirteen members, only two of

whom are from New Mexico. The remaining eleven members are from eleven

other PARCC member states.

26 Id. (emphasis added).

27 Id. at Q36 (emphasis added).


29 Exhibit J at Q37 (emphasis added).


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h. PARCC issued a press release upon issuance of the RFP, entitled PARCC

Releases RFP for Operational Assessments, stating that [t]he State of New

Mexico released this RFP on behalf of the PARCC states.31

i. An email from the PARCC CEO to member states sent two days prior to issuance

of the RFP states:

Over the last several weeks, my team has had one-on-one calls with states to discuss their anticipated mechanism for procuring or purchasing the PARCC assessments (e.g., cooperative agreement, sole source, individual competitive RFP), as well as to confirm any specific requirements the state has for cooperative purchasing.

i. Through these conversations, we have identified a number of specific needs for a few states and are working with NM to address them.

ii. I strongly encourage you to check with your team state lead, procurement official, budget/finance official and legal counsel to ensure you have shared any specific requirements for your state procurement process with us. We believe we have identified all of these requirements at this point, but want to make sure that every states needs are addressed prior to the RFPs release next week.

(emphasis added).32

68. This evidence overwhelmingly demonstrates that the RFP was intended as a

cooperative procurement through which other PARCC member states would secure assessment

services that met their needs.

69. In this case, the number of states and students at issue in the RFP is critical to a

vendors ability to accurately develop a solution for operational assessments required by those

31 See Press Release: PARCC Releases RFP for Operational Services, Nov. 19, 2013, available

at www.parcconline.org/parcc-releases-rfp-operational-assessments. 32

Brad McQueen, Emails Suggest Collusion Between AZ Dept of Ed and PARCC bid for AIMS replacement, Arizona Daily Independent, June 11, 2014.

20

states. Failure to put the requisite cooperative procurement agreements in place to ensure that a

certain number of states can and will use the awarded contract directly impacts vendors

including AIR by fundamentally changing the size and scope of the procurement and by failing

to ensure that any state other than New Mexico will use the contract, as was unambiguously

represented to vendors in the RFP Q&A.

70. In light of this mountain of evidence all of which was cited by AIR and included

in the record but ignored by the SPA the SPAs conclusion that the RFP was not a cooperative

procurement and is merely a price agreement is arbitrary, capricious, and not supported by

substantial evidence, and thus must be set aside.

71. Because this was a cooperative agreement, NMSA 1978, 13-1-135 clearly states

the PED was required to have in place executed cooperative procurement agreements with each

state on whose behalf it was procuring operational assessments. There is no dispute that the PED

failed to put agreements in place. The RFP thus was an improperly conducted cooperative

procurement, was unlawful, and must not be permitted to stand.

(3) The SPAs Determination that the RFP Did Not Restrict Competition in Violation of New Mexico Law is Arbitrary, Capricious and Not Supported by Substantial Evidence.


73. The SPAs determination that AIRs protest should be denied because the RFP

did not restrict competition in violation of New Mexico law ignores a litany of evidence to the

contrary and the indisputable fact that, out of the many qualified and interested vendors that

compete for statewide assessment contracts, only one vendor the provider of the CDP required

for the first year of the contract and the contractor that AIR alleged had an unfair advantage in

this procurement bothered to submit a proposal in response to the RFP. This highly unusual

and suspicious outcome speaks louder than any arguments made by the PED or by Pearson

21

(which not coincidentally was deemed an interested party even though this was a pre-award

protest)33 or any proclamations by the SPA about the competitiveness of the procurement at

issue.

74. AIR submitted the Protest weeks before proposals were due. Thus, the SPA had

detailed, written evidence that the RFP specifications were drafted in such a way that

competition would not be maximized as required by NMSA 1978, 13-1-164.

75. The fact that the RFP favored one particular vendor and indeed yielded only a

single proposal leads to the inescapable conclusion that the procurement under this RFP

amounted to a de facto sole source procurement, the requirements for which have not been

satisfied in this instance.34 Indeed, New Mexico law governing sole source procurements clearly

contemplates the possibility of an ostensibly competitive procurement being used to disguise a

de facto sole source procurement: The state purchasing agent or a central purchasing office shall

not circumvent the sole source request and posting and award process by narrowly drafting

specifications so that only one predetermined source would satisfy those specifications. NMAC

33 See Exhibit F. Notably, the SPA designated Pearson an interested party and invited it to

respond to AIRs protest but did not extend that same designation and invitation to the many other interested vendors that voted with their feet, so to speak, and decided to walk away from this deeply flawed RFP without submitting a bid. Indeed, the SPAs action reinforces the tautological nature of this whole procurement: none of the other vendors is an interested party because the PED awarded the contract to Pearson because Pearson was the sole bidder in this deeply flawed procurement in which all of the other interested vendors elected not to submit bids because they understood the RFP to be drafted to favor Pearson. 34

See, e.g., NMSA 1978, 13-1 126, 13-1-126.1 detailing the requirements for sole source procurements, including a written determination that there is only one source for the required service and that other similar services . . . cannot meet the intended purpose of the contract; use of due diligence to determine the basis of the sole source procurement; and posting notice of the intent to award a sole source contract on the SPAs website [a]t least thirty days before awarding the contract.

22

1.4.1.54(G); see also NMSA 1978, 13-1-126(E). This prohibition was seemingly written

with the instant case in mind.

76. This case should be reviewed in the context of the intent underlying the

Procurement Code. There is no question that the Procurement Code was intended to protect the

integrity of the procurement process and promote competition to the maximum degree

practicable. NMSA 1978, 13-1-164 provides:

All specifications shall be drafted so as to ensure maximum practicable competition and fulfill the requirements of state agencies and local public bodies. In preparing specifications, if, in the opinion of the state purchasing agent or central purchasing office, a proposed component is of a nature that would restrict the number of responsible bidders or responsible offerors and thereby limit competition, if practicable, the state purchasing agent or central purchasing office shall draft the specifications without the component and procure the component by issuing a separate invitation for bids or request for proposals or by entering into a sole source procurement.

(emphasis added). The Procurement Code thus requires the SPA to make a determination as to

whether certain specifications in a procurement restrict competition. If so and if practicable, the

SPA must revise the RFP. The SPA failed to conduct this statutorily required analysis and,

accordingly, its denial of the Protest based on an implicit conclusion that the RFP did not restrict

competition must be reversed.

A. The Requirement for Vendors to Use Pearsons CDP for Year One Was Widely Understood Within the PARCC States and Industry and Favored Pearson.

77. The SPAs conclusion that the RFP does not require the use of Pearsons CDP for

the first year of the contract is not supported by substantial evidence but rather is contradicted by

the record evidence.

78. The SPAs entire argument is based on a single passage from the RFP, which

states, in its entirety:

23

Response Requirements for Section V.B.1.

a) Offerors proposal shall include a response to the requirements specified in Section V.B.1

b) For contingency purposes, PARCC would like the Offeror to provide the following cost options: i. Hosting, maintenance, and updates for PARCCs Data

Management and Reporting Components. ii. Contractor-provided Assessment Content, Assessment Delivery,

and Shared Service for years one through four. For this option, the Contractor is not required to follow PARCCs interoperability requirements for data exchanges between Contractor supplied components. The Contractor would be expected to follow PARCCs interoperability requirements for data exchanges (item/student/organization) to/from the Contractors and PARCCs data warehouse and reporting components. The Contractor shall identify areas where meeting PARCCs requirements, would delay or prevent a successful implementation in year one.35

79. Based on this passage, as well as a response to questions in which the PED stated

that [t]he CDP vendor has yet to be contracted for, the SPA maintains that [e]very vendor had

an equal opportunity to offer their own CDP, and that vendors did not have to use Pearsons

CDP for the first contract year.36

80. This conclusion both misreads and misrepresents the RFP, and it ignores the

record evidence.

81. While it is true that the RFP invites vendors to propose use of their own CDP for

year one for contingency purposes, that does not negate the RFPs requirement for vendors to

propose and price use of Pearsons CDP for year one of the contract. Nor does it detract from

the fact that the PED and PARCC intended all along to use the Pearson CDP for year one and

that vendors would be evaluated on their ability to deliver tests using the Pearson proprietary

CDP.

35 Exhibit B at 87.

36 Exhibit A at 7.

24

82. The SPAs conclusion that use of Pearsons CDP was not a requirement of the

RFP is contradicted by substantial evidence establishing that the RFP required vendors to use

Pearsons CDP for year one. That evidence was cited by AIR, was included in the agency

record, and yet was wholly ignored by the SPA. It includes the following:

a. In Section V.B.I.F., the RFP explains that PARCC is separately procuring the

Year 1 Content/Delivery Platform (CDP) Vendor.37 Given that it did not plan

to procure the CDP as part of this procurement, PARCC obviously had no

intention of exercising the contingency of procuring the CDP from any vendor

other than Pearson even in the highly unlikely event that a vendor other than

Pearson won this contract.

b. In response to a vendor question about the provision upon which the SPA relies,

asking whether the awarded contractor [can] use their own platform in the first

year of the contract, the PED confirmed that it intended to use a separately

procured CDP for year one: The cost of an Offerors platform should be

included. Technology, price, and other factors will determine if the Contractor

can use its own platform. PARCC is requesting this only as a contingency

option. PARCC plans to use the CDP vendors platform for the first

operational year.38

c. The public record makes clear that PARCC intended to use Pearsons CDP for

year one of the contract. Specifically, in two separate submissions, in Arizona

and in Florida, each filed before the deadline for proposal submission in this

37 Exhibit B at 83-84.

38 Id. at 87 (emphasis added)

25

procurement, PARCC stated that it is using Pearsons proprietary TestNav 8 CDP

for the first year of operational assessments: PARCC is making available to

schools and districts a caching option known as Proctor Caching as part of the

Pearson TestNav 8 delivery platform that PARCC will use for the first PARCC

operational administration in 2014-2015.39 Indeed, in the Florida submission,

PARCC specifically referred to Pearson as PARCCs assessment delivery

platform provider.40

d. In addition, in the October 2012 PARCC Assessment and Administration RFP

issued by the State of Indiana, PARCC stated that it will administer the Field

Test and the first Operational Assessment on the same platform.41 PARCC is

using Pearsons CDP for delivery of the Field Test.

e. PARCC published on its website and distributed guidance to PARCC member

states in September 2013 that stated Pearsons proprietary CDP would be used:

"Web browser requirements for the PARCC Field Test and the 2014-2015

operational assessments are driven by browser compatibility with the Pearson

TestNav 8 assessment delivery platform."42 TestNav is Pearsons proprietary

CDP.

f. In December 2013, Pearsons own proposal in response to the RFP acknowledges

that it will be the year one CDP vendor: In the first operational year (2014-15),

39 See Exhibit K at 27-28; Exhibit L at 26-28 (emphasis added).

40 Exhibit L at 26.

41 Indiana PARCC Field Test RFP, Attachment E at 50.

42 Technology Guidelines for PARCC Assessments Version 3.0 September 2013 Update.

26

PARCC will use PearsonAccess and TestNav systems.43 The fact that Pearson

interpreted the RFP and publicly available evidence exactly as AIR did in the

Protest that offerors must use Pearsons proprietary CDP in Year one - leaves no

doubt that the SPAs post-hoc determination misreads and misinterprets the RFP

and ignores available evidence.

83. Requiring use of Pearsons CDP for year one gives Pearson an insurmountable

competitive advantage. It enables Pearson to compete with unequal access to information

stemming from its greater knowledge of and experience with its own proprietary CDP as

compared to other interested vendors who have no access to the details of this proprietary

platform. Because no other vendor has knowledge of, experience with, or access to Pearsons

proprietary CDP, they are effectively eliminated from the competition, rendering this a de facto

sole source procurement.

84. The Protest Decision denying AIRs protest ground challenging the RFP as

favoring Pearson because of its requirement that vendors use Pearsons CDP for year one was

not supported by substantial evidence. Indeed, the Protest Decision ignored substantial evidence

that proved otherwise. As a result, the decision was arbitrary and capricious and must be

reversed.

B. The Bundling of Test Development and Assessment Administration Work in this RFP and the Disproportionate Weighting of Evaluation Scores Overwhelmingly Positioned Pearson to Win the Procurement.

85. The wholly unnecessary bundling of two distinct sets of services test

development and test administration tipped the scale in Pearsons favor because Pearson was

already the test developer for the PARCC program. Although an incumbent vendor often enjoys

43 Pearson Proposal in Response to the RFP at Cost Narrative, p.3.

27

some advantages, in this case, the tipping morphed into massive leverage with the weighting of

evaluation scores assigned to the two distinct sets of services that were utterly disproportionate to

their relative value in the procurement. Specifically, the RFP assigned approximately 60% of the

points allotted under the RFP to the test development work even though such work is valued at

well less than 10% of the contract being awarded.44 Put another way, Pearsons role as the

incumbent test developer for the PARCC program gave it enormous advantage in securing points

that amounted to almost 60% of the total points available, which then translated into an

insurmountable lead for separate and distinct work that amounted to over 90% of the value of the

contract, all because the RFP bundled the two distinct sets of services.

86. In his decision, the SPA provided two oft-cited reasons that such bundling was

reasonable: first, that one procurement is more efficient than two; and second, that bundling

these requirements will create administrative efficiencies. Neither reason was supported by any

evidence or analysis and neither reason is consistent with the Procurement Codes requirement to

unbundle where combining specifications restricts, or in this case wholly distorts and makes a

mockery of, competition. Both of these purported reasons are true in nearly every procurement,

and thus, if they were given any credence, they would eviscerate the Procurement Codes

presumption against bundling. And even if they could in theory justify bundling, neither of these

purported reasons was supported by any analysis or evidence in the PEDs submission or the

Protest Decision. To the contrary, they were nothing more than unsubstantiated assertions. In

short, the SPAs unsupported determination that bundling these tasks is more efficient than

44 See Exhibit B at 38.

28

separately procuring them is arbitrary and capricious, is unsupported by any evidence, much less

substantial evidence, and therefore must be set aside.45

C. The Bundling of Work During Year One with Work in the Subsequent Years in a Single Procurement Further Restricted Competition.

87. As if the bundling of test development work with test administration work was

not enough, competition under the RFP was further restricted by the bundling of year one work,

delivered on Pearsons CDP, with work in years two through eight which would be delivered on

a yet-to-be-developed CDP.46 Combining work in this manner allowed Pearson to leverage its

role as the CDP provider in year one into an unearned and undeserved advantage in securing the

work in years two through eight.

88. The Protest Decision does not address AIRs challenge to this second bundling

requirement and the anticompetitive effects resulting therefrom. To the extent the Protest

Decision touches upon the issue, the SPA appears to conflate it with the bundling of test

development and test administration services and excuse it under the general, all-purpose

heading of agency discretion.47 Such half-hearted effort, combined with the lack of any evidence

or analysis, does not warrant any judicial deference.

D. The Intertwined Relationship Between PARCC and Pearson Raises Troublesome Conflict of Interest Issues.

89. The mutual interests shared by PARCC and Pearson in pursuing work in various

other states while this RFP was pending placed PARCC in a classic conflict of interest situation

in which it was in PARCCs interest to draft the specifications, evaluate the proposal, and award

45 It is practicable to unbundle the two sets of services, as that is precisely what PARCC did in

the Indiana Field Test procurement. 46

The RFP provides for a base contract of four years, plus four additional option years, for a total duration of up to eight years. Exhibit B at 13. 47

Exhibit A at 7-8.

29

this procurement to Pearson irrespective of the merits. Specifically, during the pendency of this

procurement, PARCC submitted responses in Arizona and Florida indicating its intent to partner

with Pearson to deliver the PARCC assessment on Pearsons TestNav 8 CDP system. Similarly,

and also while this procurement was pending, Pearson submitted a response to the same RFI in

Arizona that proposed to deliver the PARCC assessment.48 The significance of Pearsons

response to the Arizona RFI cannot be overstated: to date, no other vendor has been able to offer

the PARCC assessment or to use the PARCC items.49

90. The SPA dismissed AIRs conflict of interest challenge in three sentences in a

footnote: As AIR makes its argument, the potential conflict of interest for PARCC would occur

in future solicitations performed by other states. Such a matter is clearly not ripe for the State

Purchasing Agent of New Mexico. It is a matter for other states with other future solicitations to

address.50

91. The SPAs conclusion is wrong on legal grounds. At the very least, PARCCs

involvement in designing and running a procurement that favors Pearson with whom it is

partnering in other competitions for assessment and testing work creates an appearance of

impropriety that the Procurement Code prohibits. See Planning & Design Solutions v. City of

Santa Fe, 1994-NMSC-112, 25, 118 N.M. 707, 713, 885 P.2d 628, 634 ([t]he Code and the

Procurement Manual are designed to preclude even the appearance of impropriety) (emphasis

in original).

92. The SPAs conclusion also completely ignores the chilling effect on prospective

vendors in this RFP of having PARCC create the specifications for this New Mexico

48 See Exhibit M at ES-1 ES-2.

49 Catherine Gewertz, Can Any State Use PARCC or Smarter Balanced Test Items?, Education

Week, Jun. 13, 2014. 50

Exhibit A at 3, n.1.

30

procurement and determine the winner through its 13-member evaluation committee (only two

members of which were from New Mexico) while simultaneously partnering with one of the

vendors in pursuing work in other states. It is beyond comprehension how such an arrangement

rife with conflicts of interests maximizes competition, protects the integrity of the New Mexico

procurement process, or is in the interest of the State of New Mexico.

V. PRAYER FOR RELIEF

WHEREFORE, AIR respectfully requests the following relief:

1. Reverse the denial of the Protest; and

2. Cancel years two and beyond of the awarded contract; and

3. Order the SPA to conduct a separate and lawful procurement, consistent with this

Courts holding, for years two and beyond of the contract term; and

4. Determine or declare (pursuant to the Declaratory Judgment Act, NMSA 1978,

44-6-1 through 44-6-15) that the RFP restricted competition and otherwise failed to comply with

New Mexico law, and that the PED must restructure the procurement of PARCC Operational

Assessments for years two and beyond so that it is consistent with New Mexico law; or, in the

alternative,

5. Determine or declare (pursuant to the Declaratory Judgment Act, NMSA 1978,

44-6-1 through 44-6-15) that, based on the PEDs assertions and the SPAs determination, the

contract awarded pursuant to the RFP is only between the New Mexico Public Education

Department and Pearson and that the PED shall not permit any third party, including any other

state or agency thereof, to join or participate in the procurement; and

6. Such other and further relief as this Court may deem appropriate.

32

Dated: July 31, 2014 Respectfully submitted,

MODRALL, SPERLING, ROEHL, HARRIS & SISK, P.A.

Electronically Filed By R. E. Thompson R. E. Thompson Emil J. Kiehne Sarah M. Stevenson P.O. Box 2168 Albuquerque, NM 87103 Telephone: (505) 848-1800

-and-

JENNER & BLOCK, LLP J. Alex Ward Carrie F. Apfel 1099 New York Avenue, NW, Suite 900 Washington, D.C. 20001-4412 Telephone: (202) 639-6045

Attorneys for Plaintiff/Appellant American Institutes for Research

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