BID SOLICITATION #08-X-39458 ADVERTISING AND PUBLIC RELATIONS SERVICES, DEPARTMENT OF HEALTH AND SENIOR SERVICES

(NOTE: The status of this decision is published.)
 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0282-07T30282-07T3

BID SOLICITATION #08-X-39458

ADVERTISING AND PUBLIC RELATIONS

SERVICES, DEPARTMENT OF HEALTH

AND SENIOR SERVICES.

_________________________________________________________

 

Submitted October 22, 2008 - Decided

Before Judges Parrillo, Lihotz and Messano.

On appeal from the Final Agency Decision of the Department of the Treasury of the State of New Jersey, #08-X-39458.

Byrnes Kirkwood, LLP, attorneys for appellant Brushfire, Inc. (Sean F. Byrnes, on the brief).

Anne Milgram, Attorney General, attorney for respondent State of New Jersey, Department of the Treasury, Division of Purchase and Property (Lewis A. Scheindlin, Assistant Attorney General, of counsel; Cynthia Hackett, Deputy Attorney General, on the brief).

Genova, Burns & Vernoia, attorneys for respondent Winning Strategies Public Relations, LLC (Kathleen Barnett Einhorn, of counsel; Rebecca Moll Freed, on the brief).

PER CURIAM

Brushfire, Inc. (Brushfire) appeals from the final decision of the Acting Director (the Director) of the Division of Purchase and Property (the Division) awarding a contract for advertising and public relations services to Winning Strategies Public Relations, LLC (WS). Brushfire contends that the proposal submitted by WS was "materially nonresponsive" to the specifications in the request for proposals (the RFP). Brushfire further argues that the Division "failed to evaluate fully the merits" of its proposal, and failed to investigate its protest of the award as required by law. We have considered these arguments in light of the record and applicable legal standards. We affirm.

I.

On March 30, 2007, the Division's Purchase Bureau, on behalf of the Department of Health and Senior Services (DHSS), publicly advertised for proposals for a three-year contract to "plan, design, execute, and administer advertising and public relations programs . . . to promote a variety of public health programs and services," including anti-smoking campaigns. The solicitation was a re-procurement of an existing State contract due to expire on June 30, 2007. An optional pre-bid conference was scheduled for April 26, 2007, and all responses to the RFP were due by May 15, 2007.

In the information section of the RFP, prospective bidders were advised that DHSS annually directed budgetary expenditures exceeding $1.5 million dollars toward various public health issues and healthcare concerns. The RFP included a non-exhaustive list of a dozen such areas, one of which was "[s]moking prevention and cessation." Section 4.4.7 of the RFP, entitled "CONFLICT OF INTEREST," required a bidder to disclose "all contracts held by the bidder, the bidder's parent and/or subsidiaries and all contracts held by any proposed contractor, such contractor's parent and/or subsidiaries, with a tobacco company or any parent or subsidiary of a tobacco company." In section 4.4.4.1, the RFP required each submission to include a "case study" presenting "the advertising and public relations proposal . . . with all its attendant strategic and budgetary details . . . for the Comprehensive Tobacco Control Program (CTCP) campaign." The case study was to "serve as the foundation for prices" submitted in each respondent's "[p]rice [s]chedule." Each case study was to include "[o]ne [] public relations [sixty]-second radio (written) spot, one [] concept for print or transit (artwork), and one [] concept for an internet advertisement to promote the CTCP campaign." Each bidder was to "describe how the success of the radio spot . . . the print or transit advertising . . . and the internet ad . . . c[ould] be measured against the overall goal of the campaign[.]" The two primary goals of the CTCP were "to increase the number of smokers who initiate treatment to quit smoking and [] to decrease the initiation of tobacco use by youth under the age of [eighteen] and young adults [eighteen to twenty-four] years of age."

An evaluation committee (the Committee) first reviewed the nine bids submitted in response to the RFP. The Committee was comprised of professionals from the Division and DHSS and was empowered to review the submissions and offer its recommendation to the Director who had the sole authority to award the contract. By letter dated June 4, 2007, the Committee invited four bidders, including Brushfire and WS, to make oral presentations and clarify their proposals.

Following the oral presentations and further internal discussions, the Committee ranked the proposals by their "technical evaluation," i.e., without knowledge of each bid's "pricing." WS placed second while Brushfire was ranked third. On June 22, 2007, in accordance with procedures outlined in the RFP, the Committee invited the four top-ranked bidders to submit a best and final offer, which they did, each lowering their proposed prices in the process. On July 26, 2007, the Committee unanimously recommended WS be awarded the contract. By letter dated July 30, 2007, each bidder was notified of the Director's decision to award the contract to WS.

On August 13, 2007, Brushfire submitted a formal written protest to the Division. It alleged that: 1) WS had an irreconcilable conflict of interest because of its affiliation with Princeton Public Affairs Group (PPAG) which maintained "a substantial, long-standing relationship with the tobacco industry," and that WS's failure to disclose the relationship rendered its response to the RFP "materially non-responsive"; 2) WS failed to provide "specific measurable criteria" as required by RFP Sections 3.4 and 4.4.4.1, also rendering its bid non-responsive; and 3) the Division "failed to consider the merits of [Brushfire's] proposal" and misled Brushfire by supplying inaccurate information that adversely affected the submission of its best and final offer.

On August 22, 2007, WS submitted a response to Brushfire's protest, noting that it was a New Jersey limited liability company with no parent or subsidiary companies. It was owned by three individuals: James McQueeny, who owned 91.9% of its stock; Courtenay Higgins, who owned 6.5% of the shares; and Peter McDonough, who owned 1.6% of the shares. It further noted that this information was disclosed in its response to the RFP. WS emphasized that it represented a wide array of clients in the healthcare field, but that neither the company nor its owners represented or had contracts with the tobacco industry. WS also contended that it maintained no holdings in PPAG, nor did PPAG maintain any interest in WS. In particular, WS noted that Dale Florio, an active lobbyist for the tobacco industry in New Jersey and a principal in PPAG, did not have any interest in WS.

WS acknowledged that it "participate[d] in a non-exclusive, loose marketing exercise with other independently owned and operated companies referred to as a 'circle of companies,' . . . [which] [wa]s nothing more than a marketing term [and not] a binding and/or exclusive agreement." Although PPAG was part of this "circle," it would have no interest in the DHSS contract that was the subject of the RFP, either as an affiliate of WS or as a subcontractor. Referencing its actual submission, WS also denied Brushfire's claim that it failed to provide specific measurable criteria for the success of its proposed services. Finally, WS suggested that the Committee's review of the proposals was thorough and appropriate, and that it was qualified and able to perform the contract.

On September 13, 2007, the Director denied Brushfire's protest. In a written opinion, she determined that: 1) because there was no evidence that PPAG had any ownership interest in WS, nor any evidence that WS or its subcontractors had any contractual relationships with the tobacco industry, WS complied with section 4.4.7 of the RFP and there was no evidence of a conflict of interest; 2) that the submission by WS was fully responsive to the other provisions of the RFP; 3) that the Committee had thoroughly reviewed all the submissions and reasonably found WS to be the bidder whose proposal was most advantageous to the State; and 4) that the Division had not misled Brushfire with false information regarding the submission of its best and final offer.

Brushfire filed this appeal after we denied its request for emergent relief. Its request to the Division for a stay of the contract award was denied, and WS was officially awarded the contract on September 20, 2007.

II.

Brushfire has generally renewed before us the arguments it raised with the Director below. We begin by noting the unique statutory scheme that governs the award of State contracts. Pursuant to N.J.S.A. 52:34-6, "[a]ll purchases, contracts or agreements, the cost or contract price whereof is to be paid with or out of State funds shall . . . be made or awarded only after public advertisement for bids . . . ." Once bids are requested and received,

{an] award shall be made with reasonable promptness . . . by written or electronic notice to that responsible bidder whose bid, conforming to the invitation for bids, will be most advantageous to the State, price and other factors considered.

[N.J.S.A. 52:34-12a(g).]

"Any or all bids may be rejected when the . . . Director of the

Division . . . determines that it is in the public interest so to

do." N.J.S.A. 52:34-12a.

The statute contemplates that the lowest bidder may not be awarded the contract. Keyes Martin & Co. v. Dir., Div. Of Purchase & Prop., 99 N.J. 244, 252-53 (1985); Blondell Vending v. State, 169 N.J. Super. 1, 11 (App. Div.), certif. denied, 81 N.J. 333 (1979). Instead, "the courts of this state have consistently accorded the Director considerable deference and great latitude in awarding public contracts." Keyes Martin, supra, 99 N.J. at 252. "In making h[er] decision the Director necessarily is required to exercise the sound business judgment of an executive based on all available data, expertise and advice which [s]he may be able to garner from all available sources." In re Honeywell Information Sys., Inc., 145 N.J. Super. 187, 200 (App. Div. 1976), certif. denied, 73 N.J. 53 (1977).

The scope of our review of the Director's discretionary decision making is limited. Keyes Martin, supra, 99 N.J. at 253. "[T]he courts should not and cannot substitute their discretion for that of the Director[.]" Commercial Cleaning Corp. v. Sullivan, 47 N.J. 539, 549 (1966). "[I]n the absence of bad faith, corruption, fraud or gross abuse of discretion," we will not interfere with the Director's decision. Ibid. However, this highly deferential standard of review applies only to the Director's "ultimate business decision . . . as between responsible bidders whose bids conform to the invitation[.]" State v. Ernst & Young, L.L.P., 386 N.J. Super. 600, 619 (App. Div. 2006)(emphasis added)(citations and quotations omitted).

We have determined that "decisions as to responsibility of the bidder and bid conformity are to be tested by the ordinary standards governing administrative action[.]" In re Protest of the Award of On-Line Games Prod. & Operation Servs. Contract, 279 N.J. Super. 566, 593 (App. Div. 1995). "The preliminary inquiry is whether the bid deviates from the RFP. If there is no deviation, the bid must be deemed conforming. If there is a deviation, a decision must be made as to whether it is material and can be waived." Id. at 594. As to such decisions, our review is limited to determining whether the Director's decision was "arbitrary or unreasonable." DGR Co. v. State, 361 N.J. Super. 467, 474 (App. Div. 2003)(citing On Line Games, supra, 279 N.J. Super. at 593).

Brushfire contends that the bid submitted by WS was nonconforming because it failed to disclose its close contacts with PPAG, a firm that maintained contracts with the tobacco industry. Alternatively, given the stated public purpose of the contract, i.e. to curtail the public's use of tobacco, Brushfire argues the Director was required to conduct a more extensive investigation of any relationship between WS and PPAG to insure that there was no appearance of a conflict of interest if WS was awarded the contract.

N.J.S.A. 52:25-24.2 requires that bidders on public contracts that are corporations or partnerships must disclose "all stockholders in the corporation or partnership who own 10% or more of its stock." In other contexts, we have held that a bidder's failure to do so is "neither waivable nor curable, even [if] the required list was provided shortly after the opening of bids." Muirfield Const. Co., Inc. v. Essex Cty. Imp. Auth., 336 N.J. Super. 126, 134 (App. Div. 2000). However, WS did disclose the identity of its shareholders at the time it submitted its bid. Moreover, since PPAG was not a "parent, subsidiary, subcontractor, parent of a subcontractor or subsidiary of a subcontractor" of WS, the submission fully complied with the requirements of section 4.4.7 of the RFP.

Citing to Keyes Martin, Brushfire contends that even if the specifications did not require disclosure of any relationship between WS and PPAG, the Director was required to consider whether that relationship, nonetheless, would create an appearance of a conflict of interest in the public's mind. A brief discussion of the facts presented in Keyes Martin, however, amply demonstrates why it lacks any persuasive authority in this matter.

In Keyes Martin, supra, the plaintiff submitted the low bid for an advertising and promotional services contract for the New Jersey State Lottery. Id. at 24. Although the evaluation committee determined it was best-qualified for the contract, the Attorney General recommended the Director reject the bid after exposing various direct, present business dealings between the president of the company and the chairman of the Lottery Commission. Id. at 249. Because the Director determined that the public could perceive the relationship as one of special treatment which may have adversely reflected on the integrity of the lottery system itself, the Director accepted another agency's bid. Id. at 251. The Court determined that the Director properly exercised his discretion by rejecting the agency's bid due to public perception of an improper relationship between the Lottery Commission's director and the winning bidder. Id. at 262.

However, in this case, there is no allegation of any improper relationship between WS and the Division or DHSS. In other words, the public perception of the process would not be adversely affected if WS receives the award. Ibid. Since there is no direct relationship between WS and PPAG, we are hard-pressed to see how the public interest in assuring competition and fair play in the bidding process is better served by denying the Director her otherwise substantial discretion to make an award. Moreover, we fail to see how the public perception of any anti-smoking campaign WS might formulate would be adversely affected based upon its loose affiliation with PPAG as members of a "circle of [unaffiliated] companies." Any anti-smoking campaign WS might formulate and manage would be under the public sponsorship of DHSS, attenuating any misperception that a tobacco industry lobbyist was receiving State monies to promote the State's anti-smoking campaign.

Brushfire's argument that WS did not adequately respond to Sections 3.4 and 4.4.4.1 of the RFP, and, hence, should have been disqualified, is equally unavailing. As the Director noted, Section 3.4 sets forth various requirements for the "contractor" to perform. "Contractor" is a defined term in the RFP, meaning "a bidder awarded a contract as a result of th[e] RFP." Thus, that section did not set forth any requirement regarding the contents of an individual bidder's response to the RFP. Subsection 4.4.4.1 required the bidder to submit a case study using various media, and to define how its success could be "measured." Brushfire now argues that WS failed to include any meaningful measurement criteria in its response to the RFP. However, Brushfire never raised this argument before the Director, and we decline the opportunity to address it for the first time on appeal. Nieder v. Royal Indemn. Ins. Co., 62 N.J. 229, 234 (1973).

Brushfire next contends that its proposal was not fairly reviewed by the Committee or the Director, and that it was misled by information supplied by the Division while generating its best and final offer. We find both of these arguments to be of insufficient merit to warrant any extensive discussion in this opinion. R. 2:11-3(e)(1)(E). It suffices to say that the Committee's evaluation of all the proposals was rigorous. The Director's exercise of her business judgment will not be second guessed by us. Honeywell Information Sys., supra, 145 N.J. Super. at 200. As to the allegation that the Division misled Brushfire, the Director noted in her response that the Division provided all four bidders with the same information when circulating its invitation to submit best and final offers. It would appear that Brushfire is simply incorrect in presuming that the actual pricing evaluative process differed from the written instructions, or, for that matter from what it claims it was told over the phone. In any event, Brushfire has failed to articulate with any particularity how the actual pricing considerations it made in submitting its best and final offer worked to its detriment as a result of some misinformation.

Lastly, we reject Brushfire's contention that the Director was legally obligated to conduct a more thorough investigation of the allegations contained in its protest. Pursuant to N.J.A.C. 17:12-3.3, a bidder may submit a formal protest setting forth the specific grounds for challenging the award in detail. The Director shall review the protest based upon the documents, evaluation committee reports, and other written submissions as requested, and may, in her sole discretion, require oral presentations. N.J.A.C. 17:12-3.3(d). Pursuant to N.J.A.C. 17:12-3.4, the Director "is entitled to request, receive and review copies of any and all records and documents deemed appropriate and relevant to the issues and arguments set forth in the protest." The Director may request the protesting vendor "promptly provide" requested records and documents, and she may also request relevant information from "other parties deemed appropriate[.]" Ibid.

Here, the Director was furnished with extensive materials from Brushfire, and, in turn, with a detailed response from WS. She considered those, plus the Committee reports generated after both reviews. She then issued a comprehensive decision that addressed all of Brushfire's arguments. We cannot conclude that her conduct in reviewing the protest and in crafting her response was a gross abuse of her discretionary authority. We find no basis to reverse her decision.

Affirmed.

 

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A-0282-07T3

February 5, 2009