Opinion
DOCKET NO. A-0295-11T3
05-16-2013
IN THE MATTER OF THE PROTEST OF GEORGE'S GARAGE, INC., OF THE AWARD OF EXTRA HEAVY DUTY TOWING CONTRACTS IN ZONE C ON THE NEW JERSEY TURNPIKE
William J. Pollinger argued the cause for appellant Haines Towing, Inc. Thomas A. Abbate argued the cause for respondent New Jersey Turnpike Authority (Decotiis, Fitzpatrick & Cole, LLP, attorneys; Judy A. Verrone, of counsel; Jonathan Bauer, on the brief). Karen A. Confoy argued the cause for respondent George's Garage, Inc. (Sterns & Weinroth, attorneys, join in the brief of respondent New Jersey Turnpike Authority).
NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
Before Judges Messano, Ostrer and Kennedy.
On appeal from the New Jersey Turnpike Authority.
William J. Pollinger argued the cause for appellant Haines Towing, Inc.
Thomas A. Abbate argued the cause for respondent New Jersey Turnpike Authority (Decotiis, Fitzpatrick & Cole, LLP, attorneys; Judy A. Verrone, of counsel; Jonathan Bauer, on the brief).
Karen A. Confoy argued the cause for respondent George's Garage, Inc. (Sterns & Weinroth, attorneys, join in the brief of respondent New Jersey Turnpike Authority). PER CURIAM
Appellant Haines Towing, Inc. (Haines) appeals from a final agency decision of the New Jersey Turnpike Authority (the Authority) rejecting all bids for a contract to provide towing and recovery services on a section of the New Jersey Turnpike. We affirm.
I.
We derive the following facts from the record.
In October 2008, the Authority issued an invitation for the "Prequalification of Contractors for Extra Heavy Duty Towing and Recovery Services" on its roadways. Contracts to provide such services are awarded through a two-phase process. First, interested contractors are required to obtain prequalification status by demonstrating their compliance with the prequalification specifications. Second, once the prequalification process is completed, the Authority issues a request for bids to provide towing services, and awards contracts to the lowest qualified bidders. The Authority's roadways are divided into geographic zones, and multiple contracts are awarded for each zone.
Prequalification is a condition precedent to participating in the bid and the prequalification specifications are incorporated by reference, as a continuing obligation, into any contract. The purpose of prequalification is, among other things, to insure that bidders are "thoroughly qualified and experienced in extra heavy duty towing and recovery services on Interstate highways in New Jersey . . . and that their respective [g]arage [f]acility has the facilities, equipment and personnel to perform the [s]ervices required."
As part of the prequalification process, the Authority conducts an inspection of an applicant's facilities and vehicles. The purpose of the facilities' inspection, which is undertaken by Authority employees and is unannounced, is to verify compliance with specifications for on-site storage, security, repair capability and the like. Vehicle inspections, by contrast, are separately scheduled and are usually undertaken by New Jersey State Police Officers to ensure that recovery vehicles are properly registered and credentialed, and comply with all regulations governing commercial vehicles. Once an application is found to be pre-qualified, the applicant is notified of that determination by the Authority.
Pursuant to Section II(A)(19) of the Prequalification Specifications, the Authority requires bidders to submit an affidavit confirming that no material changes of condition have occurred between the granting of prequalification status and the time of bid submission. That section also provides that prequalification status shall be valid for one year from the date of notification, but is subject to the Authority's reservation of the right to re-confirm or update the determination prior to the solicitation of bids.
On January 8, 2009, the Authority received prequalification applications from, and subsequently prequalified, three towing contractors: Haines, George's Garage, Inc. (George's Garage) and Johnson Specialized Transportation, Inc. (Johnson). In 2010, the Authority issued a request for bids for two five-year towing contracts for Zone C on the Turnpike, comprising the area between Interchanges 5 and 8. The basis for the award was the lowest weighted average of the proposed hourly rates to provide a range of towing and recovery services. Bids were required to be accompanied by a bid guarantee consisting of either a bid bond or certified check. On July 21, 2010, the three bids received by the Authority were opened: (1) Johnson — $187.50; (2) Haines — $237.50 and (3) George's Garage — $237.50.
On September 10 and 13, 2010, Haines submitted letters to the Authority, protesting the prequalification and bid submissions of George's Garage and Johnson. While the Authority ultimately dismissed the Haines' protest, it did nonetheless ascertain that the bid from George's Garage included a bid bond not signed by a surety company, and disqualified its bid on that basis.
On October 26, 2010, the Authority adopted Agenda Item No. 266C-10, which memorialized the disqualification of George's Garage and awarded the two contracts for Zone C to Johnson and Haines. George's Garage then notified the Authority of its intent to protest the decision. Haines claims, however, that it was never notified of the protest. The Authority stayed execution of the awarded contracts in accordance with N.J.A.C. 19:9-2.12 and responded to the protest by George's Garage, explaining that the bid bond it had submitted was flawed. George's Garage thereafter supplemented its initial protest and asserted all the bids should be rejected because of various alleged flaws. Again, Haines claimed it was not notified of the protest.
On March 1, 2011, the Authority's designated hearing officer conducted an administrative hearing on the merits of the protest. Haines claims that it was not notified of the hearing.
At the hearing, Andrea Ward, the Authority's Director of Purchasing, testified that a significant amount of time had elapsed between the receipt of bids and the award because Haines had separately lodged a protest prior to the award, resulting in a temporary suspension of the procurement process. Although Haines' protest was ultimately dismissed, Johnson's bid security had expired in the interim. Ward did not request additional bid security at that time, but instead returned the bid security to both Johnson and Haines. Ward also confirmed that the contracts were not executed because of the protest by George's Garage.
John Sutcliffe, the Authority's Manager of Emergency Services, explained he had been unable to obtain affirmative confirmation that the motor vehicles operated by Haines and Johnson had been inspected by the State Police. The Authority's liaison to the State Police was on medical leave and no one could locate any records of vehicle inspections due to the passage of time.
By letter dated May 24, 2011, the Authority advised Johnson and Haines that while considering the protest from George's Garage, it had reviewed its records and was unable to confirm their vehicle and equipment inspections. Thus, "as a matter of fundamental fairness," the Authority invited Johnson and Haines to submit "any and all relevant evidence demonstrating that each of their facilities was inspected and duly approved."
The Authority received written submissions from Haines and Johnson. Haines' submission provided some evidence that the Authority staff had inspected the facility but did not provide specific evidence that the State Police vehicle and equipment inspection had taken place.
After the record was closed, the hearing officer issued a report and recommendation, in which she concluded that the Authority properly disqualified George's Garage's bid, and recommended rejection of the protest. She went on to determine, however, that the Authority had prematurely returned the bid security to Haines and Johnson, leaving it without any bid security whatsoever. Further, she noted that the original prequalification of the bidders had expired before the bids were submitted in July 2010. Finally, finding no reliable evidence in the record that State Police inspections of the vehicles and equipment of Haines or Johnson had occurred, and given the substantial lapse of time that transpired, the hearing officer recommended vacating the bid and undertaking a re-bid for the contracts.
She concluded:
[T]he omissions that occurred in this process were largely through no fault of the bidders, and were largely inadvertent. But the integrity of the process, and the protection of public safety are the Authority's paramount concerns. I FIND that all the bids should be rejected and a re-bid should take place at the earliest available opportunity. Prior to the receipt of new bids, I FIND that the Authority should ensure that the State Police equipment inspections are timely performed. Furthermore, all bidders should be required to submit updated affidavits disclosing any material changes of condition or, in the alternative, certifying continuing compliance with the prequalification specifications, subject to a follow-up inspection by the Authority. The same should be considered an extension of the initial prequalification award period.
On July 20, 2011, the Authority's executive director issued a final agency decision adopting the report and recommendation of the hearing officer. Haines appealed from that decision.
II.
On appeal, Haines argues:
I. The failure to provide Haines with a hearing was a violation of due process.Although we agree that the Authority's process was flawed, we do not agree that Haines was prejudiced or that the Authority acted unfairly. We turn first to the principles that guide our analysis.
II. The hearing officer's opinion decided matters outside the proper scope of the protest and those matters must be rejected.
III. Haines is entitled to the contract on the basis of its original award.
Generally, our review of a final administrative determination is limited. In re Carter, 191 N.J. 474, 482 (2007) (citations omitted). An agency determination will not be vacated "in the absence of a showing that it was arbitrary, capricious or unreasonable, or that it lacked fair support in the evidence." Ibid. (quoting Campbell v. Dep't of Civil Serv., 39 N.J. 556, 562 (1963)). Under this standard, appellate review is limited to four inquiries:
(1) whether the agency's decision offends the State or Federal Constitution; (2) whether the agency's action violates express"The burden of demonstrating that the agency's action was arbitrary, capricious or unreasonable rests upon the person challenging the administrative action." Seigel v. N.J. Dep't of Envtl. Prot., 395 N.J. Super. 604, 613 (App. Div.), certif. denied, 193 N.J. 277 (2007).
or implied legislative policies; (3) whether the record contains substantial evidence to support the findings on which the agency based its action; and (4) whether in applying the legislative policies to the facts, the agency clearly erred in reaching a conclusion that could not reasonably have been made on a showing of the relevant factors.
[Karins v. City of Atl. City, 152 N.J. 532, 540 (1998) (quoting George Harms Constr. Co. v. N.J. Tpk. Auth., 137 N.J. 8, 27 (1994)).]
We do "not substitute [our] own [fact-finding] for that of the agency," and we will "defer to the agency . . . if the findings of fact are supported by substantial credible evidence in the record and are not so wide off the mark as to be manifestly mistaken." Tlumac v. High Bridge Stone, 187 N.J. 567, 573 (2006). Particularly germane to this appeal, we recently said:
When we review an "agency's interpretation of statutes within its scope of authority and its adoption of rules implementing its enabling statutes, we afford the agency great deference." N.J. Soc'y for the Prevention of Cruelty to Animals v. N.J. Dep't of Agric, 196 N.J. 366, 385 (2008) (citing In re Freshwater Wetlands Prot. ActThis same standard applies to our review of a determination challenging a bid's conformity with State requirements. DGR Co. v. State, Dep't of Treas., Div. of Prop. Mgmt. and Constr., 361 N.J. Super. 467, 474 (App. Div. 2003) (citing In re On-Line Games Contract, 279 N.J. Super. 566, 593 (App. Div. 1995)).
Rules, 180 N.J. 478, 488-89 (2004)). As the Court noted, "[s]uch deference is appropriate because it recognizes that agencies have the specialized expertise necessary to enact regulations dealing with technical matters and are particularly well equipped to read . . . and to evaluate the factual and technical issues that . . . rulemaking would invite." In re Freshwater Wetlands Prot. Act Rules, supra, 180 N.J. at 489 (internal quotation marks and citations omitted).
[Animal Prot. League of N.J. v. N.J. Dep't of Envtl. Prot., 423 N.J. Super. 549, 550 (App. Div. 2011) (parallel citations omitted), certif. denied, 210 N.J. 108 (2012).]
With these principles in mind, we first address Haines' argument that the failure of the Authority to provide it with a hearing before rejecting all bids was a violation of due process. We acknowledge that N.J.S.A. 52:14B-9(a) of the Administrative Procedure Act provides that in a contested case "all parties" shall be afforded an opportunity for a hearing after reasonable notice. N.J.A.C. 19:9-2:12, which governs procedures to resolve bid protests before the Authority, permits, but does not mandate, a hearing. In either case, however, we have recognized that a trial-type hearing is not required to address an unsuccessful bidder's protest of an administrative decision. See Commercial Cleaning Corp. v. Sullivan, 47 N.J. 539, 550 (1966).
Rather, "an informal hearing or conference should be granted" if a dissatisfied applicant requests one. Ibid. We have recognized that "a plenary quasi-judicial hearing need not be afforded provided there is a fair opportunity, consistent with the desideratum of a fair and expeditious conclusion to the procurement process, for the protesting bidder to present the facts and law supporting the protest." Nachtigall v. N.J. Tpk. Auth., 302 N.J. Super. 123, 143 (App. Div.), certif. denied, 151 N.J. 77 (1997). See also George Harms, supra, 137 N.J. at 19 (stating that due process is satisfied as long as "the parties had adequate notice, a chance to know opposing evidence, and the opportunity to present evidence and argument in response . . . ."); Hartz Mountain Indus., Inc. v. N.J. Sports & Exposition Auth., 369 N.J. Super. 175, 188 (App. Div.) (holding that a bid protest hearing need not adhere to procedural rules and safeguards of a "trial-type hearing"), certif. denied, 182 N.J. 147 (2004); Carteret Bd. of Educ. v. Radwan, 347 N.J. Super. 451, 455 (App. Div.), certif. denied, 174 N.J. 38 (2002). These principles apply in the case before us.
Here, Haines was notified by letter from the Authority's acting Director of Law, dated May 24, 2011, about the protest filed by George's Garage and the inability of the Authority to confirm that "inspections took place and that [its] facilities were duly approved." Accordingly, both Haines and Johnson were invited to respond and to submit "any and all relevant evidence" pertaining to such inspections. Haines responded by letter the next day and submitted documents it believed were responsive to the inquiry. Haines did not request an evidentiary hearing.
We determine, therefore, that Haines was given notice and an opportunity to respond to the issues raised consistent with due process. The Authority's hearing officer had not yet ruled on the protest and had not yet closed the record. While it would have been preferable to have accorded notice to Haines of the pendency of the protest at the time the protest was filed, we do not perceive that Haines was prejudiced thereby.
Moreover, we do not find the Authority's decision to reject the bids and require re-bidding to be arbitrary or capricious. The Authority determined that the bids were all flawed as a consequence of the expiration of the prequalification status of the bidders by the time they submitted their bids, the inability of the Authority to confirm that all the inspections were completed and approved, and the Authority's inadvertent return of the bid security. The Authority, in adopting the hearing officer's finding and recommendations, determined that these flaws not only marred the process, but also compromised public safety. We defer to the Authority's expertise in this regard. In re Distrib. of Liquid Assests Upon Dissolution of the Union Cty. Reg'l High School Dist. No. 1, Union Cty., 168 N.J. 1, 10-11 (2001).
The purpose of public bidding laws is "to secure for the taxpayers the benefits of competition and to promote the honesty and integrity of the bidders and the system." In re On-Line Games, supra, 279 N.J. Super. at 589. For that reason, bidding statutes are to be construed "as nearly as possible with sole reference to the public good" with their aim being "to secure for the public the benefits of unfettered competition." Keyes Martin & Co. v. Director, Div. of Purchase, 99 N.J. 244, 256 (1985) (quoting Terminal Constr. Corp. v. Atl. City Sewerage Auth., 67 N.J. 403, 409-10 (1975)). "[B]idder responsibility and bid conformity are what guarantee that the goals underlying public bidding will be met. Through them the contracting unit is assured of equality among bidders, of the financial and ethical ability of the bidders to perform and of the performance of the contract in accordance with the RFP." In re On-Line Games, supra, 279 N.J. Super. at 592-93.
By statute, the Authority has the power to "adopt regulations . . . to provide open and competitive procedures for awarding contracts for towing and storage services." N.J.S.A. 27:23-5(s). The Legislature mandated, however, that
[t]he regulations shall . . . establish objective criteria to be considered in awarding a contract for towing and storage services which shall include, but shall not be limited to . . . adequate equipment to safely handle a sufficient volume of common vehicle types under a variety of traffic and weather conditions, location of storage and repair facilities, security of vehicles towed or stored . . . and appropriate safeguards to protect the personal safety of customers . . . .When a contracting agency "concludes in good faith that the purposes of the public bidding statute are being violated, it may reject all bids submitted and in its discretion order a readvertising of the contract." Cardell, Inc. v. Twp. of Woodbridge, 115 N.J. Super. 442, 451 (App. Div. 1971). In George Harms, the Court "resolve[d] the remaining question whether [the Authority] had the authority to reject all bids after it opened [a] bid." George Harms, supra, 137 N.J. at 20. The Court held that a public entity is not "without power to reject all bids under proper circumstances. No [public entity] could effectively engage in competitive bidding without such power." Ibid. (quoting Cardell, supra, 115 N.J. Super. at 450- 51). In George Harms, the Court also cited M.A. Stephen Constr. Co. v. Borough of Rumson, 117 N.J. Super. 431, 438 (App. Div. 1971), wherein we applied the Cardell rationale, and "held that a public entity had the right to reject all bids and the duty to exercise that right 'in good faith and for sound public reasons.'" George Harms, supra, 137 N.J. at 20 (quoting M.A. Stephen, supra, 117 N.J. Super. at 438). Citing Cardell, supra, 115 N.J. Super. at 450, the United States District Court for the District of New Jersey held that "the law in New Jersey clearly states that a public body such as the Authority has the inherent power to reject all bids under proper circumstances." Cubic W. Data, Inc. v. N.J. Tpk. Auth., 468 F. Supp. 59, 70 (D.N.J. 1978).
[Ibid.]
The remainder of Haines' arguments lack sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).
Affirmed.
I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION