Arizona

Key Agencies: The majority of Arizona’s state public procurements are overseen by the Arizona Department of Administration (ADOA) through its State Procurement Office. The Director of ADOA has authority over state procurement. Each state agency also conducts day-to-day procurement through its own Agency Chief Procurement Officer (CPO).

Key Statute: Arizona’s procurement laws are codified in the Arizona Procurement Code, found in the Arizona Revised Statutes (Ariz. Rev. Stat.) Title 41, Chapter 23 §§ 41-2501 through §§ 41-2673.

The Arizona Procurement Code can be accessed at: https://www.azleg.gov/arsDetail/?title=41

Key Regulations: Arizona’s procurement regulations are contained in the Arizona Administrative Code (Ariz. Admin. Code) Title 2, Chapter 7. Arizona’s procurement regulations can be accessed at: https://apps.azsos.gov/public_services/CodeTOC.htm#ID2

Procurement Types/Highlights: Arizona’s Procurement Code provides for several methods of source selection. The most common procurements are:

Small Purchases: The Arizona Procurement Code provides for simplified acquisition methods for procurements not exceeding $100,000. Arizona requires that small purchases are limited to small businesses when practical.

Competitive Sealed Bidding (Invitation for Bids): This is the default method of procurement for most procurements above the small purchase threshold. The Arizona Procurement Code states that contracts shall be awarded by competitive sealed bidding except as otherwise provided. The process requires public advertising of the IFB, a bid opening, and award to the lowest price responsive and responsible bidder.

Competitive Sealed Proposals (Request for Proposals): Used when factors other than price are necessary for source selection. Price negotiations and competitive discussions are allowed, and proposals are evaluated based on criteria specified in the solicitation.

Bid Protests: Arizona bid protests are governed by Ariz. Admin. Code R2-7-A901 et. seq.

Arizona permits bid protests by interested parties, defined as actual or prospective bidders or offerors whose economic interest would be affected by the contract award. Protesters can challenge a solicitation, a determination of bidder non-responsiveness or non-responsibility, or an award decision.

Protests challenging the terms of a solicitation must be filed before the bid or proposal due date. Post-award protests must be filed within 10 days after the award decision is made public. A protester may also request a 10-day extension to file upon a showing of good cause.

Protests must be submitted to the Agency CPO for the procuring agency. If a timely protest is filed before award, the award decision is automatically stayed in most cases. For timely post-award protests, the Agency CPO must issue a determination whether to stay contract performance, based on whether there is a reasonable probability the protest will be upheld, or if a stay is in the best interest of the state. Under Ariz. Admin. Code R2-7-A902, the Agency CPO must issue their stay decision no later than the “time of issuance of” the protest decision. Alternatively, protesters may also seek a stay at the State Procurement Office, if the Agency CPO denies their stay request.

Protests must be resolved by the Agency CPO within 14 days after the protest is filed. The decision must be in writing and include an explanation of the decision. If the protest is denied, the protester may appeal to the ADOA Director within 30 days of receiving an adverse decision. Upon appeal to the ADOA, an evidentiary hearing will be held, and the Director will issue a written decision on the protest appeal. The Director’s decision is the final administrative decision in the Arizona protest process.

Claims: Arizona contract claims are governed by Ariz. Admin. Code R2-7-B901 et. seq.

The Arizona Procurement Code provides for an administrative process for contractors to pursue monetary claims or contract disputes against the state.

Contractors must file a written contract claim with the Agency COA for the agency responsible for the contract. To be considered timely, claims must be submitted within 180 days after the claim arises. Arizona rules provide for a 60-day negotiation period for the Agency CPO to engage in informal discussions and settlement negotiations to resolve the claim by mutual agreement. If no settlement can be reached, the CPO must issue a written decision within 60 days after the end of the negotiation period.

If a claim is denied, contractors may appeal the decision to the ADOA Director within 30 days of receipt of the agency’s decision. The ADOA may conduct a hearing for the contractor and agency to present evidence related to the claim. Following the hearing, the Director must issue a written decision on the appeal. The Director’s decision is the final administrative decision in the Arizona claims process.

Suspension & Debarment: Arizona’s rules concerning suspension and debarment are contained in Ariz. Admin. Code R2-7-C901 et seq.

Under Arizona law, the ADOA Director possesses sole authority to suspend or debar a contractor from participating in state procurements. Contractors may be suspended or debarred for criminal convictions, fraudulent conduct, serious breaches of contract, or upon determinations of contractor non-responsibility.

The ADOA may suspend a contractor pending an investigation or legal proceeding if needed to protect the state’s interest. The ADOA must provide written notice to the contractor of the suspension, and the suspended party has 30 days from receipt of the suspension notice to appeal. Suspensions typically remain in effect while the appeal is pending. Suspensions under the Arizona Procurement Code may not exceed six months. 

Once the Director finds a reasonable basis to initiate formal debarment proceedings, the contractor must be provided with a Notice of Debarment Proposal stating the reasons for the debarment and informing the contractor of the right to a hearing to contest the debarment. Upon receiving notice, the contractor must request a hearing within 10 days. Under the Arizona Procurement Code debarments may not exceed three years.

Interesting/Distinctions: The Arizona Procurement Code does not apply to certain public entities in the state. Notably, the Arizona Board of Regents are exempt and are instead required to adopt their own procurement rules. Other agencies are given exemptions to use specialized processes specific to their needs. For example, the State Transportation Board and the Department of Transportation are exempt from the Arizona Procurement Code for highway construction projects.

Under Ariz. Rev. Stat. § 41-2636, the Director of ADOA is required to appoint a State Set-Aside Committee to determine suitable programs for disabled workers and for Arizona Correctional Industries, the state prison work program. State agencies are required to purchase certain goods and services from designated non-profits or prison industries without competition.