Opinion
No. 2009 CA 1214.
September 15, 2010.
APPEALED FROM THE NINETEENTH JUDICIAL DISTRICT COURT IN AND FOR THE PARISH OF EAST BATON ROUGE DOCKET NUMBER 568, 075, DIVISION E (23) STATE OF LOUISIANA THE HONORABLE WILLIAM A. MORVANT, JUDGE.
Steven B. Loeb, Murphy J. Foster, III, Baton Rouge, Louisiana, Attorneys for Plaintiff/Appellant TransCore ITS, L.L.C.
Cheryl L. Duvieilh, Darhlene M. Major, Baton Rouge, Louisiana, Attorneys for Defendant/Appellee Louisiana Department of Transportation and Development.
Chris P. Pierce, Baton Rouge, Louisiana, Attorney for Defendant/Appellee Jack B. Harper Contractor, Inc.
BEFORE: PARRO, KUHN, AND McDONALD, JJ.
On October 1, 2007, the State of Louisiana, through the Department of Transportation and Development (DOTD), issued a notice of intent (NOI) to request letters of interest, and advertised for design-build proposals in connection with State Project No. 737-99-0799, the Baton Rouge to New Orleans Intelligent Transportation Systems (ITS), Traffic-Incident Management (TIM) Program, Phase I, Route I-10 (Bonnet Carre Floodway), Jefferson, St. Charles, and St. John the Baptist Parishes (the Project).
Thereafter, DOTD published a Request For Qualifications to all proposers indicating an interest in accordance with the procedure established under the applicable version of La.R.S. 48:250.3, entitled "Design build contracts; qualifications of design-build entities; public announcement procedures; letters of interest; selection of short list; bid proposals by competitors; technical review committee; selection and process of award."
TransCore ITS, L.L.C., (TransCore) and others submitted responses, and DOTD then selected a "short list" of four proposers to submit detailed technical and cost proposals in accordance with a Scope of Services Package (SOSP) published by DOTD for the purpose of evaluation, in accordance with La.R.S. 48:250.3. The SOSP set forth Instructions To Proposers for the Project. The SOSP stated that the due date for proposals was April 2, 2008, that the final total technical score for any proposer would be issued April 21, 2008, and that the selection (award) and notification would occur on April 23, 2008.
A letter from DOTD on April 21, 2008, notified TransCore of its final total technical score and reminded TransCore of the bid opening procedure. On April 23, 2008, the lump sum price proposals were opened, the adjusted scores were calculated, and the adjusted scores were posted on DOTD's website, showing that TransCore had the lowest adjusted score.
The SOSP provided that the successful proposer must comply with required contract provisions for a Disadvantaged Business Enterprise (DBE). Since the Project was a Federal Aid construction project, DBE participation provisions were mandatory. Pursuant to the SOSP, TransCore was required to submit its CS-6AAA (DBE form) to DOTD.
On May 9, 2008, TransCore's DBE form was sent to DOTD via Federal Express, and it was received by DOTD on May 12, 2008. By letter dated May 23, 2008, DOTD notified TransCore that its proposal was rejected, because its DBE form was not received by DOTD within ten business days after the opening of the lump sum price proposals.
One week later, on May 30, 2008, TransCore filed a protest and appeal with DOTD, contesting the decision. In its letter dated May 30, 2008, TransCore objected to DOTD's decision and requested a meeting, specifying that the meeting should not be scheduled until June 9, 2008, or thereafter. DOTD scheduled the meeting for June 10, 2008. After the meeting, by letter dated June 13, 2008, TransCore was notified that DOTD's decision to reject its bid was upheld.
On June 19, 2008, TransCore filed a petition for preliminary injunction, permanent injunction, declaratory judgment, mandamus, or alternatively, damages against the State through DOTD and Jack B. Harper Contractor, Inc. (Harper Contractor). TransCore asserted that there was no requirement for submittal of the DBE form in the DOTD's Request for Qualifications, and that the SOSP issued by DOTD to the short-listed proposers contained a provision in the Supplementary Specifications under, Subsection 103.02, which specifically stated that the proposer should provide its DBE form within 10 working days following notice of award. TransCore asserted it had never received any written notice that DOTD intended to award it the contract, and thus, DOTD did not issue the required notice of award under Supplementary Specifications, Subsection 103.02, to commence time running on the ten-day time period. Further, TransCore asserted it had submitted its DBE form when formally requested to do so by DOTD's consultants, ABMB Engineers, Inc.
Harper Contractor was named as an additional defendant in an amended and supplemental petition filed June 20, 2008. Harper Contractor apparently had the second-lowest adjusted score for the Project.
TransCore asserted that no official award of the contract had been made by DOTD, nor had a contract been executed, nor any work commenced on the Project. TransCore stated that, based on the final scoring, TransCore had the winning proposal, and the decision to reject the TransCore bid was arbitrary, capricious, and unjustified. TransCore prayed for a writ of mandamus compelling DOTD to award the Project to TransCore. In the alternative, it asked that a preliminary injunction be issued to prevent DOTD from making an award and entering a contract with another proposer, that the injunction be made permanent, and alternatively, that TransCore be awarded damages, including, but not limited to, lost revenues, profits, bid preparation costs, attorney fees, interest, and costs.
DOTD filed an answer and a reconventional demand for damages and attorney fees in the event that the trial court issued, then later dissolved, a preliminary injunction. DOTD then filed a peremptory exception raising the objection of no cause of action, stating that TransCore had been identified as a short-listed entity and invited to submit a technical and cost proposal for the design-build contract; however, its proposal was ultimately rejected and TransCore was not chosen as the successful design-builder. DOTD asserted that authority for the design-build method of contract, administration, and selection is dictated by La.R.S. 48:250.2, 250.3, and 250.4, and that there could be no challenge by legal process to the choice of the successful design-builder other than for fraud, bias for pecuniary or personal reasons not related to the interest of the taxpayers, or arbitrary and capricious selection by the secretary. Because the allegations of TransCore's petition failed to allege such facts, DOTD claimed TransCore had no cause of action.
DOTD also filed a peremptory exception raising the objection of nonjoinder of an indispensable party, asserting that while TransCore prayed to be awarded the design-build project, DOTD and Harper Contractor had executed a contract for the design-build project on June 19 and 23, 2008. Thus, Harper Contractor was an indispensable party to a complete adjudication. Harper Contractor filed a dilatory exception raising the objection of unauthorized use of a summary proceeding.
On July 1, 2008, after a hearing, the district court denied DOTD's peremptory exception raising the objection of no cause of action; granted Harper Contractor's dilatory exception raising the objection of unauthorized use of a summary proceeding; dismissed the portion of the petition that pled for injunctive relief and mandamus; decreed that TransCore could proceed by ordinary proceeding on its remaining claims and causes of action; and denied as moot DOTD's peremptory exception raising the objection of nonjoinder of an indispensable party.
Thereafter, TransCore filed a motion for partial summary judgment on its action for declaratory judgment, seeking a determination against DOTD on liability only. TransCore asserted that DOTD had wrongfully rejected its proposal, that it was entitled to an award of the contract, and that DOTD was liable for any damages suffered by TransCore, to be established later at trial. DOTD opposed the TransCore motion for summary judgment and filed a cross motion for summary judgment, asserting that TransCore could not recover damages against DOTD, because TransCore did not timely seek relief or challenge the contract award when corrective action could have been taken by DOTD, and because there was no arbitrary and capricious action taken by DOTD.
After a February 23, 2009 hearing, the district court ruled in favor of DOTD, finding that DOTD was not arbitrary or capricious in rejecting TransCore's proposal, as DOTD's decision was supported by the SOSP. The court granted DOTD's cross motion for summary judgment, denied TransCore's motion for partial summary judgment, and dismissed TransCore's suit. The judgment was signed on March 2, 2009.
TransCore has appealed that judgment, asserting that the district court erred as a matter of law in its interpretation of the SOSP document by resolving the conflicting time periods for delivery of the DBE form contrary to the DOTD bidding document. TransCore states that the SOSP specifically provides that the contract for the Project "will be procured . . . per LRS 48:250.3 and 48:250.4 in effect as of date of NOI [October 1, 2007.]" Further, it alleges that La.R.S. 48:250.3 makes it mandatory for DOTD to award the contract for this project to the proposer with the lowest adjusted score and that TransCore was the proposer receiving the lowest adjusted score. Thus, DOTD had a ministerial duty to award the contract to TransCore.
Our review of a grant or denial of a motion for summary judgment is de novo. Independent Fire Insurance Co. v. Sunbeam Corp., 99-2181, p. 7 (La. 2/29/00), 755 So.2d 226, 230. The judgment sought on a motion for summary judgment shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to material fact, and that mover is entitled to judgment as a matter of law. La.C.C.P. art. 966B. In this case, the parties stipulated that there were no genuine issues of material fact.
APPLICABLE STATUTORY LAW
As of October 1, 2007, Louisiana Revised Statute 48:250.2 provided:
Louisiana Revised Statute 48:250.2 was revised by 2008 La. Acts, No. 111, § 1, effective June 6, 2008.
A. Notwithstanding any law to the contrary or the requirements of this Part, if the secretary determines it is in the best interest of the taxpayers, the Department of Transportation and Development, with approval of the House and Senate transportation, highways and public works committees, may formulate, develop, and implement a pilot program to evaluate the cost-effectiveness of combining the design and construction phases of a transportation facility, including but not limited to highways, interchanges, or bridges into a single contract.
B. Repealed by Acts 2004, No. 81 § 2.
C. This pilot program shall be limited in duration to allow use of the design-build method to construct the new Mississippi River Bridge at St. Francisville (connection to US 61) including approach structures and connecting roadways, which project is included in the Transportation Infrastructure Model for Economic Development program. Additionally, the secretary may also select an additional project to utilize the design-build method; however, the cost of the additional project shall not exceed five million dollars.
D. There shall be no challenge by any legal process to the choice of the successful designer-builder other than for fraud, bias for pecuniary or personal reasons not related to the interest of the taxpayers, or arbitrary and capricious selection by the secretary. Once the designer-builder has been chosen and a contract for a stipulated schedule and sum certain price executed, the price of the design-build contract shall not be increased other than for inflation as prescribed in the contract and for site or other conditions of which the designer-builder had no knowledge and should not have had knowledge as a reasonable possibility existing at the site or concerning the design and construction.
As of October 1, 2007, Louisiana Revised Statue 48:250.3 provided:
Louisiana Revised Statute 48:250.3 was revised by 2009 La. Acts, No. 262, § 1, effective July 1, 2009.
A. For purposes of this Section, "design-builder" means the entity contractually responsible for delivering the project design and construction.
B. Each design-builder shall employ, or have as a partner, member, coventurer, or subcontractor persons or a firm with persons who are duly licensed and registered to provide the services required to complete the project and do business in this state. The standard professional engineer and land surveyor qualifications as provided for in R.S. 37:681 et seq., the rules and regulations of the Louisiana Professional Engineering and Land Surveying Board, and the
department's standard technical qualification requirements for firms providing professional engineering and land surveying services as provided for in R.S. 48:290 shall apply to the components providing design services, and the standard contractor qualifications as provided for in R.S. 37:2150 et seq., and the current rules and regulations of the State Licensing Board for Contractors shall apply to the component providing construction services utilized by the design-builder, based upon the applicable categories for the specific project. All licenses for each component shall be obtained prior to or concurrent with award of the project to the selected design-builder by the department.
C. (1) A notice of intent to request letters of interest for a design-build project shall be distributed by the department through advertisement in the Daily Journal of Commerce, the Baton Rouge Advocate, by appearance on the Department of Transportation and Development's Internet home page, and by other means to ensure adequate response, including newspapers, trade journals, and other forms of media which may be appropriate for specialty services. All notices of intent shall be advertised a minimum of thirty days prior to the deadline for receipt of responses and shall contain a brief description of the project, the required scope of services, and sufficient information for a design-builder to determine its interest and to enable it to submit a letter of interest. The department may readvertise the notice of intent using additional media or publications in an attempt to solicit additional responses if the number of responses received by the department is inadequate.
(2)(a) The department may use a private design professional to develop the description of the project and the required scope of services; however, if the department uses a private design professional, the private design professional shall be selected in accordance with the provisions of R.S. 48:291(A).
(b) The description of the project and the required scope of services shall include design criteria, analyses, reports, and cost estimates for the design-build project as prepared by a private design professional or the department.
D. The department shall provide a request for a qualifications package to design-builders who submit a letter of interest. The department shall identify all required information in the request for qualifications package and in the standard response forms provided by the department. The response to a request for qualifications package shall include statements of qualification by credentials and experience of design component members for the areas of expertise specific to the project and statements of qualification by experience and resources of the construction team component. The completed response form and any other required information shall be transmitted to the department by the responding design-builder by the deadline to submit such forms and information as provided in the request for qualifications package. Any response failing to meet all of the requirements contained in the request for qualifications package shall not be considered by the department. False or misrepresented information furnished in response
to a request for qualifications package shall be grounds for rejection by the department.
E. (1) A primary design-build evaluation committee, whose membership is provided for in R.S. 48:291(A), shall evaluate the responses to the request for qualifications package received by the department. The following general criteria used by the primary evaluation committee in evaluating responses to the request for qualifications package for design-build services shall apply to both the design and construction components of any responding entity:
(a) Experience of both the design and construction entity components and of key personnel as related to the project under consideration.
(b) Past performance on department projects.
(c) Any project-specific criteria as may apply to project needs.
(2) The primary evaluation committee shall evaluate the qualifications of responding entities on the basis of the criteria set forth in this Subsection and shall select a short list of not fewer than three and not more than five of the highest rated entities; however, if fewer than three responses are received, the secretary may approve proceeding with the design-build process. The primary evaluation committee may, at its discretion, be assisted by other department personnel in its evaluation of an entity's qualifications. The primary design-build evaluation committee shall present its short list to the chief engineer for recommendation to the secretary. The short-listed entities shall be invited by the secretary to submit a detailed technical and cost proposal for the design-build project. The invitation from the secretary to the short-listed entities shall specify a deadline for submission of such proposals.
F. (1) Depending upon the complexity of the project and the degree of flexibility in the approach to design and construction methods, the specific requirements of the technical proposal shall be identified by the department to the entities making the short list by means of a "Scope of Services Package". Generally, the technical proposal shall include discussions of design strategy and preliminary design concepts, construction sequencing, techniques, materials, and methods, the schedule for commencement and completion of all phases of work, and a lump sum cost for all services in fulfillment of the requirements and within the constraints of the "Scope of Services Package".
(2) For more complex projects and projects with scopes which permit flexibility and innovation in the design and construction approach, the department shall compensate unsuccessful and responsive short-listed entities for the expense of preparing the technical proposal. The amount of compensation to be paid for the technical proposal shall be predetermined by the department and shall be included in the department's scope of services package. The department may use concepts submitted by any paid short-listed entity to design and construct the project.
G. The chief engineer, with concurrence of the secretary, shall establish a technical review committee for evaluation of design-build proposals. The technical review committee shall include representatives from the construction, road design, bridge design, and planning sections of the department. The chief engineer, with concurrence of the secretary, shall assign a project manager, who shall become the chairman of the technical review committee for the project. The technical review committee, including the project manager, shall identify specific technical elements of the project, depending on the characteristics of the project, to be included in the technical score. Additionally, the chief engineer, with concurrence of the secretary, may select additional department engineering and technical experts, and nationally recognized design-build experts to serve as committee members to score each technical element of the project. Members of the technical review committee shall not have served as members of the primary evaluation committee. Each member of the technical review committee shall make his scoring of assigned elements available for public review. Such scores shall be considered public record.
H. (1) An adjusted score approach shall be used by the department in determining the winning proposal. An adjusted score shall be determined using the following three components:
(a)(i) The technical score determined by the technical review committee. Weighing factors may be assigned to each element depending on its relative magnitude or significance to the overall project. Each technical review committee member shall rate his assigned element of the proposal from each of the entities on the short list and shall submit such scores to the chairman of the technical review committee. The schedule and price bid shall not be made known to the technical review committee during the scoring process. The chairman of the technical review committee shall adjust the scores for any applicable weighing factors and shall determine the total technical score for each proposal.
(ii) Prior to determining the adjusted score, the chairman of the technical review committee shall notify each design-build proposer, in writing, of each proposer's final total technical score.
(b) The time value, consisting of the product of the proposed contract time expressed in calendar days multiplied by the value-per-calendar-day expressed in dollars established by the department and included in the "Scope of Services Package."
(c) The price proposal.
(2) The winning proposal shall be the proposal with the lowest adjusted score. The adjusted score for each entity's design-build proposal shall be determined by the following formula: Adjusted Score = (Price Bid+Time Value) divided by Technical Score. If the Time Value is not used, the Adjusted Score shall be determined by the following formula: Adjusted Score = Price Bid divided by Technical Score.
ANALYSIS
In its argument, TransCore relies on language in the SOSP, which provides that the contract will be procured per La.R.S. 48:250.3 and 48:250.4 in effect as of the date of the NOI, October 1, 2007. Louisiana Revised Statute 48.250.3 mandates DOTD to award the contract for the design-build project to the proposer receiving the lowest adjusted score. Thus, TransCore asserts, as long as it complied with the bidding documents as published by DOTD, then DOTD had a ministerial duty to award it the contract, since it had the lowest adjusted score.
Further, TransCore relies on language of the SOSP's Supplemental Specifications that refers to a "notice of award" of the contract as the start time for the ten-day period to submit the DBE documents, and asserts that "notice of award" means written notice by letter from DOTD to TransCore. TransCore cites in its argument SOSP, Supplemental Specifications, Subsection 103.02, Award of Contract, which provides, in pertinent part:
The Department shall award the contract to the Proposer with the lowest adjusted score within 45 calendar days after the public opening or within 20 calendar days after the receipt by the Department of concurrence in award from all funding agencies or sources, whichever occurs last. Where concurrence in award is required, the total time from public opening to award of contract, shall not exceed 60 calendar days unless extended by mutual agreement between the Department and the successful Proposer. Should the successful Proposer not agree to extend the deadline for award of contract, the proposal may be returned to the Proposer and the Department, at its discretion, may award the contract to the next successful Proposer or may re-advertise the Project.
The selected Proposer shall, within ten working days following the notice of award, provide DOTD, in writing, the Proposer's Federal Internal Revenue Service Employer Identification Number, or, if the Proposer is an individual with no employer identification number, the Proposer's Social Security Number. If not already provided as part of the Lump Sum Price Proposal, the Proposer shall provide Form CS-6AAA and Attachments to Form CS-6AAA within ten working days following notice of award.
Within 15 working days after DOTD notifies the selected Proposer that DOTD will award the Contract to the Proposer, the selected
Proposer shall deliver to DOTD one original and three certified copies of the following:. . . .
On the other hand, DOTD relies on the language of the SOSP that states that the ten business days begin to run after the opening of the bids. This reference to time running after the opening of the bids is found in numerous places in the SOSP. DOTD cites the SOSP Instructions To Proposers, Table 1.7.1, Anticipated Schedule, which provides that the "Selection (Award) and Notification" will occur on Wednesday, April 23, 2008, as evidence that the selection, award and notification occurred at the same time. Further, DOTD relies on the Instructions to Proposers, Required Legal Information For Section 1 Of The Technical Proposal, Subsection 8.2.2(6), which states that:
The winning Proposer will be allowed 10 business days following the opening of the Lump Sum Price Proposal to provide a completed Form CS-6AAA, Bidders Assurance of DBE Participation, and Attachment to Form CS-6AAA. It should be noted that the DBE goal for this Project is six percent (6%) of the Lump Sum Contract Price. Proposers may include Form CS-6AAA with the Lump Sum Price Proposal. However, the Proposer will be declared non-compliant if Form CS-6AAA is submitted as part of the Technical Proposal.
Also, the lump sum price proposal requirements, Subsection 8.6.1D, Form CS-6AAA and Attachment to Form CS-6AAA provide that:
Only the winning Proposer is required to submit Form CS-6AAA, Bidders Assurance of DBE Participation, and Attachment to Form CS-6AAA. The winning Proposer will be allowed 10 business days following the opening of Lump Sum Price Proposal to provide a completed Forms (see Section 8.2.2(6))[.]
In order to resolve the issue of whether the ten-day time period started from the opening of the lump sum price proposals or after a later notice of award of the Project, we look to the SOSP, which provides for a methodology to follow if parts of the SOSP conflict. The SOSP provides:
1.1 Precedence Of Contract Documents:
The Standards Specifications, the Supplemental Specifications, Special Provisions, Technical Specifications and supplementary documents are essential parts of the Contract. A requirement
occurring in one is as binding as though occurring in all. These documents are intended to be complementary and to describe and provide for a complete work.
In case of discrepancy, the following order of precedence will apply:
1. Technical Specifications
2. Special Provisions
3. Supplemental Specifications
4. Standard Specifications
5. Standard Plans
The Table Of Contents to the SOSP for State Project No. 737-99-0799 shows that the Special Provisions include the DBE Participation in Federal Aid Construction Contracts (02/07), found at page D-1. This provision states, in part, "This project is a DBE goal project. In accordance with the Required Contract Provisions for DBE Participation in Federal Aid Construction Contracts elsewhere herein, the DBE goal for approved subcontracting work on this project is six percent (6%) of the total Lump Sum Price." However, this provision says nothing about the time for submission of the DBE forms.
The SOSP includes the provisions that provide ten days to submit a DBE after the opening of bids, which are relied on by DOTD, as well as those which provide ten days to submit a DBE after notice of award of the contract relied on by TransCore. Throughout the SOSP, the document refers to ten days after the opening of the bids, and, as the documents are intended to be complementary, we find that DOTD was not arbitrary and capricious in rejecting the bid of TransCore for failure to comply with the requirement that gives the bidder with the lowest adjusted score ten business days after the opening of bids to submit its DBE form.
Further, we note the Instructions To Proposers, Subsection 1.3.7, Errors, provides that "If at any time during the Proposal process a mistake, error, or ambiguity is identified by the Proposer in the documents supplied by DOTD, the Proposer shall have the duty to notify DOTD, in writing, of the recommended correction in accordance with Section 2.2." TransCore failed to do so.
Thus, we affirm the trial court judgment in favor of DOTD, which judgment found that DOTD was not arbitrary or capricious in rejecting TransCore's proposal, granted DOTD's cross motion for summary judgment, denied TransCore's motion for partial summary judgment, and dismissed TransCore's suit. Costs of this appeal are assessed against TransCore.