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In re: Request for Opinion

ISD Project No. E13-WASD-01R

Program and Construction Management Services

Related to the Wastewater System Priority Projects

for the Miami-Dade Water and Sewer Department.

/

REPORT OF PROFESSOR ANTHONY V. ALFIERI ON PUBLIC PROCUREMENT

ANTHONY V. ALFIERI, for his declaration pursuant to section 92.525, Fla. Stat.

(2013), states under penalty of perjury that the following is true and correct:

PROFESSIONAL BACKGROUND

1. I am a Professor of Law, Dean’s Distinguished Scholar, and the founding Director of the

Center for Ethics and Public Service at the University of Miami School of Law, where I have taught

civil procedure, lawyering skills, professional responsibility, and professional liability and legal

malpractice since 1991.1 I am also a Visiting Scholar at the Dartmouth College Ethics Institute.

2. I earned an A.B. from Brown University, graduating magna cum laude in 1981 with

concentration and senior thesis honors in Law and Society from the Center for Law and Liberal

Education, and a J.D. from Columbia University School of Law graduating in 1984 with Harlan

Fiske Stone Scholar, Charles Evans Hughes Fellowship, and Jane Marks Murphy Prize honors.

3. I have published more than 70 articles, editorials, and essays on ethics, the law of

lawyering, and the legal profession in leading law journals, newspapers, and book anthologies. This

1 The Center for Ethics & Public Service is an interdisciplinary ethics education, professionalism training, and

community assistance program devoted to the values of ethical judgment, professional responsibility, and public service

in law and society. It is the winner of the American Bar Association 1998 E. Smythe Gambrell Professionalism Award,

the Florida Bar Seventh Annual 1999-2000 Professionalism Award, and the Miami-Dade County Commission on Ethics

and Public Trust 2001 Arete Award for nonprofit of the year.

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body of scholarship, together with my work on behalf of the Center for Ethics and Public Service,

has been cited more than 3,000 times in law journals, research networks, and in the media (e.g.,

Daily Business Review, Miami Herald, New York Times, Sun-Sentinel, Wall Street Journal,

Washington Post, National Public Radio, ABC News Nightline, CNN, and PBS). I have also

lectured widely on ethics and professional responsibility for bar associations, corporations, for-profit

and nonprofit law firms, government agencies, and federal and state courts. My curriculum vitae is

attached as Exhibit A.

4. I am a member of the American Law Institute, the American Bar Association Center for

Professional Responsibility, the Executive Committee of the Association of American Law

Schools Section on Professional Responsibility, and the New York Bar; a former member of the

Ethics, Integrity & Accountability Task Force of the Miami-Dade County Commission on Ethics

and Public Trust, the Florida Bar Standing Committee on Professionalism, the Florida Bar Task

Force on the Attorney-Client Privilege, and the Executive Committee of the Association of

American Law Schools Section on Clinical Education; a former advisor to the Miami-Dade

County Alliance for Ethical Government; an elected fellow of the American Bar Foundation and an

elected member of the Omicron Delta Kappa Honor Society and the Alpha Epsilon Lambda

Graduate Honor Society at the University of Miami; a former Contributing Op-Ed Columnist for the

Miami Herald; and the winner of the Florida Supreme Court 1999 Faculty Professionalism Award,

the University of Miami School of Law’s 2000 and 2009 Richard Hausler Professor of the Year

Awards, the Association of American Law Schools Section on Clinical Education 2004-2005

Gary Bellow Scholar Award, the Association of American Law Schools Section on Clinical

Legal Education 2007 William Pincus Award, the Association of American Law Schools Section

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on Pro Bono and Public Service Opportunities 2007 Father Robert Drinan Award, and the

University of Miami School of Law’s 2011-2012 Public Interest Innovative Service Award.

5. I have been accepted in Florida federal and state courts as an expert witness in

numerous matters of legal ethics and professional responsibility, and served as a legal ethics

expert for the Discipline Counsel of the Florida Bar.

6. I make this declaration upon personal knowledge of the law of lawyering, the body of

law regulating the legal ethics and professional responsibility of the legal profession,2 as well as

the laws and regulations governing Florida and Miami-Dade County, including The Conflict of

Interest and Code of Ethics Ordinance. See Miami-Dade County Conflict of Interest and Code of

Ethics Ordinance § 2-11.1 (as amended through July 2012).

RETENTION IN THIS MATTER

7. I have been engaged by Genovese Joblove & Battista to render an objective and truthful

ethics opinion regarding Miami-Dade County public procurement policies in this matter.

8. I have been afforded the opportunity to review the following documents and their

accompanying exhibits: Letter from Mayor Carlos A. Gimenez to Joseph M. Centorino (Sept. 27,

2013)(the “Gimenez Letter”), In Re: The Protest of Recommendation to of Notice to Professional

Consultants for ISD Project No. E13-WASD-01R (Sept. 26, 2013)(the “Protest Letter”), Letter

from Albert E. Dotson, Jr. to Joseph M. Centorino (Oct. 7, 2013), and Letter from Albert E.

Dotson, Jr. to Robert Cuevas (Sept. 30, 2013).

STATEMENT OF FACTS

9. Based on a review of the above-mentioned information, and communications with

Genovese Joblove & Battista and others, I understand the relevant facts in this matter pertain to

2 In Florida, the law of lawyering includes the Florida Rules of Professional Conduct (“Florida Rules”), adopting

with modification the American Bar Association Model Rules of Professional Conduct (“Model Rules”). See Florida

Rules of Prof’l Conduct (2013); Model Rules of Prof’l Conduct (2013).

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Miami-Dade County’s Notice to Professional Consultants for ISD Project No. E13-WASD-01R

(the “NTPC”) and the proposers AECOM Technical Services, Inc. (“AECOM”) and CH2M Hill

(“CH2M”), specifically “various communications taken by [CH2M] during the evaluation period

of the [NTPC] solicitation.” Gimenez Letter at 1. The first communication occurred on August 9,

2013, five days prior to the First Tier meeting of the NTPC selection committee,3 in the form of a

“direct e-mail” by a CH2M representative to “selection committee members.” Gimenez Letter at

2. The second communication occurred on August 27, 2013, one day prior to the Second Tier

meeting of the NTPC selection committee, in the form of a “‘Tier 2 Supplemental Submittal’”

containing “additional materials and resumes” hand “delivered” by CH2M “directly to the

selection committee members.” Gimenez Letter at 2.

OPINION

10. In summary, based on the above statement of facts, in my opinion: (a) an integrity

problem is created when a proposer communicates directly with each selection committee

member during the evaluation process after the proposals are received, opened and made public;

(b) following the public opening and distribution of competitive proposals, it is inappropriate to

allow a proposer to supplement its original submittal to include additional information and staff

credentials directly to selection committee members prior to the selection meeting; and (c) there

is an integrity and competitive advantage problem created when a proposer submits a

supplemental submittal to include a substantial amount of additional new information. I hold this

opinion to a reasonable certainty.

11. BOTH INTEGRITY AND COMPETITIVE ADVANTAGE PROBLEMS ARE CREATED

WHEN A PROPOSER INAPPROPRIATELY COMMUNICATES DIRECTLY WITH EACH SELECTION

3 By appointment, the selection committee was comprised of “County staff and non-County members.” Gimenez

Letter at 2.

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COMMITTEE MEMBER DURING THE EVALUATION PROCESS AFTER THE PROPOSALS ARE

RECEIVED, OPENED, DISTRIBUTED, AND MADE PUBLIC, AND WHEN A PROPOSER

INAPPROPRIATELY SUPPLEMENTS ITS ORIGINAL SUBMITTAL TO INCLUDE A SUBSTANTIAL

AMOUNT OF ADDITIONAL NEW INFORMATION AND STAFF CREDENTIALS AND DELIVERS THE

SUBMITTAL DIRECTLY TO SELECTION COMMITTEE MEMBERS PRIOR TO THE SELECTION

MEETING.

Both integrity and competitive advantage problems are created when a proposer

inappropriately communicates directly with each selection committee member during the

evaluation process after the proposals are received, opened, distributed, and made public, and

moreover, when a proposer inappropriately supplements its original submittal to include a

substantial amount of additional new information and staff credentials and delivers the submittal

directly to selection committee members prior to the selection meeting. Integrity and competitive

advantage problems affect both the process and the outcome of governmental decision making in

the context of public procurement.

(a) Government Process-based Integrity and Competitive Advantage Problems.

Government process-based integrity and competitive advantage problems taint

procurement decision making procedures by injecting bias and prejudice, or the risk of bias and

prejudice,4 either against or in favor of a party. Even when actual bias and prejudice is unproven,

if the impartiality of the decision making process might reasonably be questioned, public

confidence and trust in open and accountable government are eroded. The express legislative

intent and purpose of the Miami-Dade County Commission on Ethics and Public Trust is to

“restore public confidence in government.” Miami-Dade County, Florida, Code of Ordinances,

4 Process-based integrity problems also increase the risk of inaccurate, inconsistent, and unpredictable decision

making.

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Part III, Chap. 2, Administration, Art. LXXVIII, Commission on Ethics and Public Trust, § 2-

1067 (2011). See also Danielle M. Conway, State and Local Government Procurement 311

(2012)(observing that the purpose of general ethical standards of conduct in public contracting

“is to maintain the public trust and to promote procurement integrity throughout the procurement

process”).

To ensure the evenhanded treatment of parties in the government procurement process,

Miami-Dade County “has consistently provided that communication and delivery of

proposals/submittals to selection committee members is through the County’s professional staff

and that proposals or supplemental information are not submitted directly to the selection

committee by proposers or their representatives.” Gimenez Letter at 2. This gatekeeping policy

serves three important prophylactic purposes: first, it prevents the use or disclosure of

confidential information to the advantage or disadvantage of a particular proposer; second, it

screens potential conflicts of interest involving the personal interest of a decision maker and the

interests of a proposer or a third person; and third, it promotes decision making efficiency by

channeling the form, content, and delivery of information through the County’s professional

staff. For reasons of statutory accountability, procurement experience, and regulatory expertise,

the County’s professional staff, rather than self-interested proposers, stand in the best position to

make such gatekeeping judgments.

Significantly, the County’s approved gatekeeping policy is reinforced by the “Cone of

Silence” provision in section 1.11 of the NTPC. See Protest Letter Ex. 5. By its express terms,

the Cone of Silence prohibited CH2M’s communications with the selection committee in this

case. The standard exception to this prohibition is inapposite here because of the membership

composition of the NTPC selection committee and because of the submittal protocols required

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under section 2.2 of the NTPC document governing the delivery of information. See Miami-

Dade County Conflict of Interest and Code of Ethics Ordinance § 2-11.1 (t)(1)(c)(i) (as amended

through July 2012); Protest Letter Ex. 5. CH2M’s representative explicitly acknowledged the

County’s established informational screening and delivery procedures and protocols. See Letter

from Mitchell A. Bierman to Hugo Benitez (Aug. 22, 2013).5

Nonetheless, on August 9, 2013 five days prior to the First Tier meeting, CH2M

unilaterally disregarded the County’s well settled policy by communicating with selection

committee members through “direct e-mail,” thereby negating important gatekeeping and

screening functions and creating the risk of unchecked governmental decision making. See

Protest Letter, Ex. 6, at 1. CH2M’s deliberate and repeated violation of the County’s gatekeeping

policy undermined the fairness of the NTPC selection process. On its face, the First Tier Meeting

Tabulation Sheet, dated August 14, 2013, shows AECOM, rather than CH2M, to be deserving of

the contract award strictly on the merits of its proposal under the applicable NTPC qualitative

criteria. See First Tier Meeting Tabulation Sheet (Aug. 14, 2013). The reversal of that

determination subsequent to CH2M’s intentional contravention of the County’s gatekeeping

policy and inappropriate delivery of a “‘Tier 2 Supplemental Submittal’” containing “additional

materials and resumes” to selection committee members during the NTPC evaluation period

without affording AECOM adequate notice or a meaningful opportunity to be heard raises

serious issues of procedural fairness. See Second Tier Meeting Tabulation Sheet (Aug. 28, 2013).

The calibrated timing of CH2M’s breach, coming after the opening and public dissemination of

AECOM’s proposal, is doubly vexing because it enabled CH2M to revise its initial submittal

based on advantageous information gleaned from AECOM’s proposal and the selection

5 CH2M’s refusal to abide by County procedures and protocols raises concerns under the Florida Rules of

Professional Conduct. See Fla. Rules of Prof’l Conduct R. 4-3.4 (c), 4-3.9 (2013).

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committee’s Tabulation Sheet. On procedural fairness grounds, CH2M’s multiple breaches and

its larger defiance of the County’s gatekeeping policy deprived AECOM of adequate notice of,

and a meaningful opportunity to respond to, the improperly delivered Supplemental Submittal.

(b) Government Outcome-based Integrity and Competitive Advantage Problems.

Government outcome-based integrity and competitive advantage problems tilt results

unfairly against or in favor of a party to the procurement process. Fairness problems involve the

unequal treatment, or the lack of evenhanded treatment, of similarly situated parties, here

AECOM and CH2M. Once again, to safeguard the equal treatment of parties in the government

procurement process, Miami-Dade County “has consistently provided that communication and

delivery of proposals/submittals to selection committee members is through the County’s

professional staff and that proposals or supplemental information are not submitted directly to

the selection committee by proposers or their representatives.” Gimenez Letter at 2. As before,

this gatekeeping policy serves the core civic governance purposes of preventing the use or

disclosure of confidential information to the advantage or disadvantage of a particular proposer,

screening potential conflicts of interest, and promoting decision making efficiency by channeling

the form, content, and delivery of information.

Once more, the County’s endorsed gatekeeping policy is bolstered by the “Cone of

Silence” provision in section 1.11 of the NTPC. See Protest Letter Ex. 5. By design, the Cone of

Silence proviso barred CH2M’s communications with the selection committee. The exception to

this prohibition is inapplicable here due to the composition of the NTPC selection committee and

the stringent submittal protocols required under section 2.2 of the NTPC document. See Miami-

Dade County Conflict of Interest and Code of Ethics Ordinance § 2-11.1 (t)(1)(c)(i) (as amended

through July 2012); Protest Letter Ex. 5. CH2M’s representative freely recognized the County’s

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informational screening and delivery procedures and protocols. See Letter from Mitchell A.

Bierman to Hugo Benitez (Aug. 22, 2013).

Nevertheless, again on August 9, 2013 five days prior to the First Tier meeting, CH2M

flouted the County’s accepted policy by communicating with selection committee members

through “direct e-mail.” See Protest Letter, Ex. 6, at 1. CH2M’s knowing violation of the

County’s policy compromised the result of the NTPC selection process recommending CH2M

for the NTPC contract. To be a just result, a government contract award to a proposer must be

defensible on the merits. A plain reading of the First Tier Meeting Tabulation Sheet, dated

August 14, 2013, demonstrates that AECOM, not CH2M, earned the contract award strictly on

the merits of its proposal under relevant NTPC criteria. See First Tier Meeting Tabulation Sheet

(Aug. 14, 2013). The upsetting of that determination following CH2M’s violation of the

County’s policy and its inappropriate delivery of a “‘Tier 2 Supplemental Submittal’” providing

“additional materials and resumes” to selection committee members during the NTPC evaluation

period without notice to AECOM and without giving AECOM an opportunity to be heard raises

grave issues of substantive justice. See Second Tier Meeting Tabulation Sheet (Aug. 28, 2013).

The timing of CH2M’s breach, subsequent to the public opening and distribution of AECOM’s

proposal, improperly allowed CH2M to revise its initial submittal based on useful information

taken from AECOM’s proposal and the selection committee’s Tabulation Sheet. On substantive

justice grounds, CH2M’s disregard of the County’s policy resulted in the improper admission

and unfiltered consideration of ssupplemental materials, including substantial new information,

during the selection process, a deliberative and evidentiary error that condemns the instant result.

(c) Cost Inefficiency-based Integrity Problems in Public Procurement.

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In the context of public procurement transactions, government process- and outcome-

based integrity problems create situations of cost inefficiency. Cost inefficiency occurs when

scarce public resources are wasted and private costs are increased. A procurement process, for

example the NTPC, that must be reopened because of CH2M-instigated procedural irregularities

and substantive unfairness wastes scarce public resources and increases the private costs incurred

by AECOM, a blameless third party. Increasing the cost burdens on firms like AECOM in an

environment of economic austerity creates market entry barriers in public works capital

improvement projects, reducing competition, and driving up pricing. These burdens weigh

especially heavily on firms, like AECOM, committed to a culture of regulatory compliance with

correspondingly higher institutional costs of training, monitoring, and enforcement.

(d) Moral Hazard Problems in Public Procurement.

Moral hazard problems arise when a party, here CH2M, knowingly engages in calculated,

rule-breaking behavior without incurring the adverse costs of such behavior which instead shift

to a rule-compliant third party, in this case AECOM, and the public.6 This risk asymmetry

insulates the risk-taking party, namely CH2M, from the negative public and private

consequences of its own rule-breaking behavior, thereby incentivizing inappropriate or reckless

conduct in the future.

Negative public consequences here include the social cost of reopening the NTPC

competitive selection process and reaching a new determination, as well as the social cost of

undermining public confidence in the competitive selection process. The cost of reopening and

redetermination are calculable, measured by the transaction costs of a new selection process and

the environmental costs of unabated sanitary sewer overflow. In contrast, the cost to the integrity

of the Miami-Dade County public works procurement system and to public confidence in that

6 See generally Tom Baker, On the Genealogy of Moral Hazard, 75 Texas L. Rev. 237 (1996).

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system are incalculable, whether gauged by the higher regulatory costs of monitoring and

deterring proposer bad behavior or the higher civic costs of regaining public confidence in

compromised procedures and unreliable results.

Negative private consequences include the economic cost to present proposers, like

AECOM, who must redraft their submittals and restart a new selection process, and the

economic cost to future proposers who must prepare their submittals and navigate a selection

process vulnerable to competitive rule-breaking behavior. Inevitably, if forced to restart or to

suffer a protracted selection process, present and future proposers will incur lost opportunity

costs and lost profits. Within the limited marketplace of firms undertaking capital improvement

projects of the scale contemplated here, lost profits ultimately will drive out firms operating at a

competitive disadvantage because of the inappropriate, rule-breaking conduct of competitors,

encourage monopolistic pricing by surviving firms, and in the long run increase government

public works project costs to the detriment of an already strained County budget. At the same

time, if encouraged by result-oriented selection incentives and rewards to engage in competitive

bad behavior, present and future proposers will wage a race to the bottom marked by

inappropriate, risk-taking conduct at the expense of their own private, institutional integrity.

Taken together, the negative public and private consequences of rewarding CH2M in the

context of the NTPC selection process cogently illustrate the meaning of moral hazard – “if you

cushion the consequences of bad behavior, then you encourage that bad behavior.”7 Here, the

incentive effects of reopening the NTPC selection process not only tempt future proposers to

engage in bad, rule-breaking behavior, but also condone a procurement model that systematically

favors the interests of proposers who treat that process as a rule-breaking gambit or a high stakes

game of chance. Conversely, the same incentive effects systematically disadvantage proposers

7 Baker, supra note 6, at 238 n. 2.

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like AECOM who comply in good faith with communication policies crafted to guarantee fair

and just procurement practices and to foster public trust in honest and open government.

12. CONCLUSION For the reasons stated above, in my opinion: (a) an integrity problem is

created when a proposer communicates directly with each selection committee member during

the evaluation process after the proposals are received, opened and made public; (b) following

the public opening and distribution of competitive proposals, it is inappropriate to allow a

proposer to supplement its original submittal to include additional information and staff

credentials directly to selection committee members prior to the selection meeting; and (c) there

is an integrity and competitive advantage problem created when a proposer submits a

supplemental submittal to include a substantial amount of additional new information. I hold this

opinion to a reasonable certainty.

Insofar as this matter is ongoing, I will continue to review materials relevant to this

opinion. Therefore, this opinion is subject to change as additional information becomes available

or receives clarification in the future.

Under penalty of perjury under the laws of Florida, I declare that the foregoing is true and

correct to the best of my knowledge and belief.

Dated: Coral Gables, Florida

October 28, 2013

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