Facing Court VMI cancels planned DEI contract award but faces possible Court sanctions

Editor's note: For full transparency and so our readers may review the actual court documents and form their own conclusion, all publicly available Court filings are posted to the online version of this article at: www.cadetnewspaper.com and available for download from the links at the end of the article in our print edition The lawsuit filed by the Center for Applied Innovation, LLC (CAI) against the Virginia Military Institute (VMI) for violation of Virginia procurement laws and rules show the case is proceeding toward the Court trial in the Rockbridge County Circuit Court, but not without significant controversy. VMI is again seeking to have the case dismissed, this time, because they canceled the planned award of the DEI contract. CAI is seeking sanctions against, and other punishment of, VMI and the Board of Visitors (BOV) for making false and/or misleading statements to the Court. The latest actions, in an increasingly complex and important case, came following a Court hearing on July 14, 2022, when the parties appeared for argument on defendant VMI's Plea in Bar and Demurrer. The Court considered both oral and written arguments of counsel and overruled VMI's Plea in Bar in a written opinion dated August 3, 2022. VMI had attempted to have the case dismissed on the grounds VMI was exempt from the Virginia Public Procurement Act (VPPA). VMI then filed a Motion to Reconsider asking the Court to change its original ruling and dismiss CAI's case. As a result of VMI's arguments in its motion to reconsider and the subsequent hearing, the Court did reverse its initial decision and granted VMI's Plea in Bar, but did not dismiss CAI's case. VMI's actions following the Court's decision on its Motion to Reconsider have now become highly questionable. In seeking a follow-up story by The Cadet, after the July 14, 2023 hearing on VMI's motion to reconsider and to have it state CAI's case was dismissed, Mr. William Wyatt, VMI's official spokesperson, issued a statement to The Cadet that, "I'm sure you've already heard, but just in case you haven't, a Rockbridge County Circuit Court judge yesterday threw out CAI's case against VMI affirming that the VPPA does not apply to VMI. In essence, what the judge said is that CAI's argument was without merit" [emphasis added]. Senior alumni who spoke with BOV Members and senior members of the VMI Alumni Agencies, but requested to remain anonymous because they were not officially approved to speak for the organization, informed The Cadet that some BOV members and Alumni Agency personnel were told by VMI officials the Court's ruling was a complete victory for VMI and outright end of the case for CAI. Actual Court documents of of the Court's ruling on the plea and bar, and the current case status show Mr. Wyatt's statements, and those allegedly made by VMI and Alumni officials, were both inaccurate and misleading as to the disposition of the case. The Court did not "throw out" CAI's case against VMI, nor did it say or imply "that CAI's argument was without merit". The Court did grant CAI leave to amend its complaint to include applicability of the RULES and other areas. CAI did file an amended complaint on December 28, 2022. CAI's amended complaint also contained CAI's 54-page Protest with 245 footnotes and an additional 657 pages of evidence. That filing also contained significant additional information CAI uncovered since the company's initial filing. Among these were: "In discovery to date, VMI admits that documents were not maintained and otherwise destroyed, despite documented expectation of a protest." According to the amended complaint, "VMI did not even attempt to deny its spoliation or improper conduct in permitting its agents to destroy and/or fail to retain records relating to the scoring and procurement" and "the spoliation is truly concerning, as VMI expected a protest, yet admitted this unlawful act to occur." "Pressure by the VMI leadership was placed on procurement staff to unnecessarily shorten the acquisition cycle without sufficient urgency justification and with the intent to steer the contract to a specific Offeror to one within a selected group." "Upon information and belief, VMI has, since this lawsuit was filed, elected to move forward with portions of the training required under the scope of the RFP by using internal cadets, faculty and staff to perform the desired services." Proof the case was moving forward to full Court proceeding is evidenced by the response to CAI's amended complaint CAI filed with the Court January 17, 2023. The majority of VMI's response simply denied most of CAI's allegations while not providing evidence supporting those denials. As CAI argued in its amended complaint, "VMI persists in seeking to escape liability for its malfeasance based on alleged technicalities, rather than addressing the matter on its merits." Although VMI recently rebranded its DEI program to "Inclusive Excellence" to eliminate references to "Diversity, Equity and Inclusion", its response to CAI attested it remained essentially the same training and focus. According to VMI's response, "VMI has internally conducted some training within the scope of the RFP and that it has the right to do so but denies the remaining allegations in Paragraph 21 of the Complaint." In its response, VMI also represented to the Court, as it did in the July 14, 2022 hearing before the Judge, that the Institute would not move forward with a contract to award work in the original Request for Proposal (RFP) while the case was pending. The next steps were to be for the Court to set a trial date. Contrary to the claims and statements by VMI officials the case ended with CAI's loss, CAI's amended complaint and VMI's response eliminated any preliminary challenge to CAI's claim, so the next step was for the case to go to trial before the Court. This was an apparent clear victory for CAI that cleared the path for the company to conduct further, more detailed discovery.Discover could have included sworn depositions from members of the VMI Board of Visitors (BOV), administration, faculty and staff involved in the procurement to the highest levels, to include the VMI Superintendent, Maj. Gen. Wins. A sudden turn of events in the case came on or about January 31, 2023, according to CAI's recent filing with the Court, when VMI notified CAI it would not award any contract under the RFP to NewPoint Strategies and requested CAI withdraw its lawsuit. Canceling the proposed contract award to NewPoint was the exact relief CAI requested in its lawsuit. Subsequently, on March 7, 2023, VMI petitioned the Court through "Defendant VMI's Motion to Dismiss the Case as Moot". According to the filing, VMI requested: This bid protest lawsuit is moot because VMI has published its decision to not to award any contract on the disputed request for proposal. As a result, the plaintiff has obtained all of the relief that it would have been entitled to in this matter, namely the cancellation of the notice of intent to award the contract. Accordingly, this matter should be dismissed as there is no longer any actual controversy between the parties. What would have appeared to be a clear victory for CAI over VMI and the BOV, however, turned into an even greater controversy based on what CAI claims it discovered while VMI sought to dismiss the case as moot. CAI filed a "Motion for show cause and sanctions" on April 7, 2023 alleging VMI made deliberate false statements and other misrepresentations to the Court and during the July 14, 2022 hearing and after. The allegations and evidence in CAI's current 15-page motion and 156 pages of accompanying supporting evidence, if proven accurate far surpass the Institute's previous misrepresentations CAI's case was dismissed on its merits when it was, in fact, approved by the Court to move forward. They would go to the very cornerstone on which VMI stands – the Honor Code that all VMI Cadets, and by extension, faculty, staff and especially the Institute's leadership are bound. CAI's motion for sanctions begins with the allegation that, during the July 14, 2022 hearing, VMI submitted an affidavit of Kathleen Tomlin, attached to the motion, wherein VMI represented that no work had been performed under the RFP and VMI did not intend to award a contract under the RFP while CAI's civil case was pending. Potions of the official Court transcripts CAI filed with its motion documents that, during the hearing, counsels for VMI, stated to the Court: "And then paragraph 7 [Tomlin Affidavit] is that VMI does not intend to award a contract under the RFP while the lawsuit is pending, which I believe addresses some of the concerns that plaintiff counsel was raising about potentially under Rule 52. VMI could go forward, but we've been transparent with plaintiff during this process that that's not our intention; that we're going to abide by the Court's ruling." The documents VMI included in its motion appear to prove that when counsel for VMI, made the statement and presented the affidavit, that VMI, had, in fact, already worked to move forward with NewPoint on work requested under part of the RFP. NewPoint is the company VMI originally intended to award the DEI training contract that started CAI's lawsuit. The Court transcript, included with CAI's motion, appears to show the Court explicitly inquired to confirm that VMI would honor its word not to award work contained in the RFP. It documents an exchange between the Court, Mr. Bernhardt, representing VMI on behalf of the Virginia Attorney General's Office, and Mr. Patrick O'Leary. O'Leary, VMI Class of 1990, General Counsel and Senior Assistant Attorney General at Virginia Military Institute, was appointed by former Governor Northam's administration: THE COURT: Well, I guess my question is, is VMI saying to the Court that it intends to continue what it says its intention is under paragraph 7? (emphasis added). MR. BERNHARDT:· Your Honor, I think we were stating what it states in the affidavit, which is VMI does not intend to award a contract while the lawsuit is pending.· If the lawsuit is no longer pending, VMI almost certainly would then go forward with the contract… See Exhibit B of CAI's filing, pgs. 52-53 (emphasis added). According to CAI's motion, "Co-counsel for VMI narrowed Mr. Bernhardt's statement it did not intend to award a contract under the RFP to emphatically state it had not done so:" MR. O'LEARY:· If I may add, Your Honor, yes, Your Honor. The intent of the statement is that their lawsuit repeatedly refers to a contract that's not in existence. There is no contract. We haven't awarded the contract yet. That's what the affidavit attest to." See Exhibit B, pg. 53 of CAI's filing.(emphasis added) At the conclusion of argument, VMI confirms its position: MR. BERNHARDT: Just a final note.· The rules in 50(B) do provide for the contract can still be voided even if contract performance begins. Again, that's not our client's intention. We're not trying to be funny with the way it's worded. It's just simply reflecting what our client's current intention is, which is to allow the legal process.See Exhibit B, pgs. 54-55 of CAI's filing (emphasis added). CAI's counsel then expressed concern that VMI would not honor its word and the Court responded: THE COURT: Well, I would certainly cast the [I]nstitute in a very poor light if something different happens… Relying on VMI's representations, and the Court's statements regarding VMI's statements, CAI did not push for an injunction hearing or seek other relief from the Court in the interim. What CAI later uncovered appears to show that, unknown to CAI and the Court at the time of the hearing on July 14, 2022, VMI was already working with NewPoint Strategies and the VMI Contracting Office had already awarded a contract to NewPoint on July 1, 2022 for what they called a "Special Engagement". The contract was for NewPoint to move forward with portions of the work explicitly provided for in and under the RFP. VMI later posted the award to the Virginia Electronic Procurement System ("eVA") on July 5, 2022 but for work in support of the VMI Protocol Office, not the DEI office, in what CAI claims was "a not so subtle attempt to 'camouflage it."" Documents in the public record show CAI brought its discovery to the attention of VMI's counsel, Mr. Bernhardt, who responded that he was not aware of these "Special Engagement" dealings between his client VMI and NewPoint and needed time to investigate what had occurred. On or about February 10, 2023, Mr. Bernhardt informed counsel for CAI in a phone call of VMI's position on the "Special Engagement" with NewPoint that the Institute had every right to do what it did. After learning of VMI's "Special Engagement" with NewPoint, CAI worked to determine more details of what occurred relating to this Purchase Order and VMI's representations to this Court. The motion includes the following summary of what CAI has discovered as of the date it files the motion for sanctions: On June 8, 2022, at the previous request of VMI, NewPoint submitted a proposal for a "Special Engagement" to the Virginia Military Institute for "Professional Development workshops for Inclusive Excellence Leadership Committee" based on the original Request for Proposal #V211-22-054. On June 15, 2022, the same date as Ms. Tomlin's affidavit, at the previous request of VMI, NewPoint submitted a revision of its June 8, 2022 "Special Engagement proposal" to the Virginia Military Institute. Documents accompanying CAI's motion show that NewPoint, in the accompanying email, wrote: "I took the liberty of scrubbing more 'terms' I thought might be 'touchy' without taking away any intentions. I believe we are good now." (Emphasis added.) CAI claims the email indicates the intention "to conceal or otherwise evade discovery of this "touchy" malfeasance by VMI." On June 23, 2022, VMI directed NewPoint to again revise its June 15, 2022 "Special Engagement" proposal, specifically to delete the full scope of work details showing 3 sessions, as in NewPoint's original proposal response to the RFP, and other work. The documents show the VMI Procuement office also directed NewPoint to delete the value of $30,060. Per Jamica Love's email to NewPoint contained in the Court records, "our procurement office will need the last page to add up to $10,000, not $30,060", and "It can be simply listing the project management, facilitation, evaluation design and final reporting totaling $10,000." (Emphasis added.) The significance of this action, according to CAI's motion, allowed the purchase to qualify for "a $10,000 purchase order that would not have to be advertised or bid, only minimally disclosed on the eVA website as a "done deal." On June 24, 2022, Jamica Love created and submitted a requisition, Purchase Order (PO) "P.O. B3279", to purchase DEI professional development workshops and other DEI-related services from NewPoint CAI claims "were functionally equivalent to, or otherwise substantially similar to or the same as, the requirements in the RFP." On July 1, 2022, 13 days before the July 14, 2023 hearing when VMI presented the affidavit to the Court attesting no contract had been or would be awarded and made the oral statements, records show the VMI Contracting Office issued the PO to NewPoint for DEI "Professional Development workshops for Inclusive Excellence Leadership Committee" at the cost of $10,000. The exhibits accompanying CAI's motion also show the proposal and award VMI relied on/included the original cost sheet NewPoint submitted with its original RFP proposal discounted to its June 15, 2022 Special Engagement proposal. VMI then began receiving services under the contract. It was not until four days later, on July 5, 2022, records show VMI posted the PO to eVA NewPoint as having been awarded by the VMI Protocol Office when the PO was for DEI services. Exhibits filed by CAI also purport to show that "during the Period July 2022 through at least August 2022, VMI moved forward with the DEI-related questionnaire (survey), Executive level and some management and cadet facilitator training, workshop and 'focus groups' with proposed dates of August 15th, 17th, 23rd and 24th that were functionally equivalent to, or otherwise substantially similar to or in other ways the same as, those in the RFP." CAI includes emails showing the attendees and the survey/questionnaire. In the July 15, 2023 hearing before the Court VMI presented Tomlin's affidavit to the court and made multiple representations that no work had been performed under the RFP and VMI did not intend to award a contract under the RFP. The records provided by CAI in its filing show that, at the times these representations were made, VMI had, indeed, contracted with NewPoint for DEI work. CAI's documents contain a detailed cross-walk showing work detailed in VMI's original RFP through NewPoints original proposal, and, ultimately, into the Special Engagement PO VMI awarded to Newpoint. On October 14, 2022, NewPoint delivered to VMI its "Report and Recommendations: Inclusive Excellence Leadership". Review of the report shows it included "Next Steps" CAI claims "establishes that VMI intended to, and almost certainly already had, conducted with (or received from) NewPoint additional work functionally equivalent to, or otherwise substantially similar to or the same as, those in the RFP." The Next Steps CAI cites in its filing from the report states, "We recommend that the third meeting to be facilitated by NewPoint be used to create an implementation plan for the recommendations provided in this report. The plan would identify specific tactics and actions, timelines, and accountability measures required to produce the desired results." [emphasis added]. CAI then argues that because of VMI's lack of candor and honesty with the Court at the July 14, 2022 hearing, aand other filings, as well as the false and/or misleading representations and/or material facts they omitted, CAI would have had several options available to it at that time, including insisting on the Court's issuance of an injunction to prevent VMI from moving forward with any work with NewPoint from the RFP. CAI's motion then turns to VMI request for dismissal of the case on grounds that it is not moving forward with the Contract, but points out that VMI omits any reference that it has already moved forward with NewPoint for work under the RFP. CAI further claims that "In seeking its dismissal, VMI also fails to admit that its illusory, unkept promises and material representations/omissions at the July 14 hearing enabled VMI to use and execute on NewPoint's major training, facilitation, focus groups, survey, workshop and other DEI-related deliverables from the original RFP in order merely to substitute cadets and VMI employees, including VMI's own Chief of Staff, in order to execute the work from the original RFP without any significant interruption from the civil case filed by Plaintiff." CAI provides examples of DEI training schedules and other documents to support this allegation. CAI's motion ends asking the Court to require VMI to explain its conduct and requests various sanctions and other relief to include: enjoining Defendants from contracting with NewPoint as a Prime or Sub-contractor now or in the future; enjoining any current contracts with NewPoint as a Prime or Subcontractor to VMI for DEI services that were functionally equivalent to, or otherwise substantially similar to or the same as, those in the RFP; find, as a matter of fact and law, VMI is not in substantial compliance with the terms of the MOU and/or with the requirements of Chapter 824 and 829 and/or Virginia Public Procurement Act, Chapter 43, (§ 2.2-4300 el seq.) of Title 2.2 of the Code of Virginia and/or Rules Governing Procurement of Goods, Services, Insurance and Construction by a Public Institution of Higher Education of the Commonwealth of Virginia; awarding Center for Applied Innovation, LLC all attorney's fees and costs incurred for legal representation and work on this matter after July 1, 2022 in pursuing this matter; and provide other sanctions, negative inferences, and relief as the Court may determine to be appropriate. Although the motion lays out what appears to be a strong case, CAI faces the main obstacle that sanctions are rare and at the discretion of the presiding judge. The view of the Honor Code-based VMI Family, however, may be quite different. VMI prides itself that "The [Honor] system does not recognize degrees of honor." While VMI may escape sanctions from the Court based on the Institute's creative application of nuances in the Procurement rules, the VMI community may hold it accountable under General Order 46, Code of Ethics, that, "No unlawful practice or a practice at odds with these standards can be justified on the basis of customary practice, expediency, or achieving a 'higher' purpose." Or, more directly put in the Code of Ethics: "It is not acceptable to ignore or disobey policies if one is not in agreement with them, or to avoid compliance by deliberately seeking loopholes." Editor's note: The company filing the lawsuit, CAI, is owned by one of the alumni advisors to The Cadet. This in no way influenced writing or publication of this article. The Cadet editorial staff retains complete editorial control of the newspaper's contents. As such, we use other sources and, mostly, public documents posted with the article in this reporting and we post the full documents filed by both parties we obtained from the public record both for full disclosure and also to ensure our readers have all the original documents to review and form their own opinions based on facts.